Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ü No .

Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No ü.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90
days. Yes ü No .

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months. Yes ü No .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.

Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ü.

The aggregate market value of the outstanding common stock, other than shares held by persons who may be deemed affiliates of the registrant, as of the
last business day of the registrants most recently completed second fiscal quarter was approximately $17 billion. As of February 10, 2012, there were 1,066,107,670 shares of common stock, par value $1.00 per share, of the registrant
outstanding.

Documents incorporated by reference.

Part III of this Form 10-K incorporates by reference certain information from the registrants definitive Proxy Statement for its 2012 Annual Meeting of Shareholders to be filed pursuant to
Regulation 14A (Proxy Statement).

In this Form 10-K, selected items of information and data are incorporated by reference to portions of the Proxy Statement. Unless otherwise provided herein, any reference in this report to disclosures in
the Proxy Statement shall constitute incorporation by reference of only that specific disclosure into this Form 10-K.

Formed in 1888, Alcoa Inc. is a Pennsylvania corporation with its principal office in New York, New York. In this report, unless the
context otherwise requires, Alcoa or the company means Alcoa Inc. and all subsidiaries consolidated for the purposes of its financial statements.

The companys Internet address is http://www.alcoa.com. Alcoa makes available free of charge on or through its website its annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after the company electronically files such material with, or
furnishes it to, the Securities and Exchange Commission (SEC). The SEC maintains an Internet site that contains these reports at http://www.sec.gov.

Forward-Looking Statements

This report contains (and oral communications made by
Alcoa may contain) statements that relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those
containing such words as anticipates, believes, estimates, expects, forecast, hopes, outlook, projects, should, targets,
will, will likely result, or other words of similar meaning. All statements that reflect Alcoas expectations, assumptions or projections about the future other than statements of historical fact are forward-looking
statements, including, without limitation, forecasts concerning aluminum industry growth or other trend projections, anticipated financial results or operating performance, and statements about Alcoas strategies, objectives, goals, targets,
outlook, and business and financial prospects. Forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors and are not guarantees of future performance. Actual results, performance or outcomes may
differ materially from those expressed in or implied by those forward-looking statements. For a discussion of some of the specific factors that may cause Alcoas actual results to differ materially from those projected in any forward-looking
statements, see the following sections of this report: Part I, Item 1A. (Risk Factors), Part II, Item 7. (Managements Discussion and Analysis of Financial Condition and Results of Operations), including the disclosures under Segment
Information and Critical Accounting Policies and Estimates, and Note N and the Derivatives Section of Note X to the Consolidated Financial Statements in Part II, Item 8. (Financial Statements and Supplementary Data). Alcoa disclaims any
intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.

Overview

Alcoa is the world leader in the production and management of primary
aluminum, fabricated aluminum, and alumina combined, through its active and growing participation in all major aspects of the industry: technology, mining, refining, smelting, fabricating, and recycling. Aluminum is a commodity that is traded on the
London Metal Exchange (LME) and priced daily based on market supply and demand. Aluminum and alumina represent more than 80% of Alcoas revenues, and the price of aluminum influences the operating results of Alcoa. Nonaluminum products include
precision castings and aerospace and industrial fasteners. Alcoas products are used worldwide in aircraft, automobiles, commercial transportation, packaging, building and construction, oil and gas, defense, consumer electronics, and industrial
applications.

Alcoa is a global company operating in 31 countries. Based upon the country where the point of sale occurred, the U.S. and
Europe generated 49% and 27%, respectively, of Alcoas sales in 2011. In addition, Alcoa has investments and operating activities in, among others, Australia, Brazil, China, Guinea, Iceland, Russia, and Saudi Arabia, all of which

present opportunities for substantial growth. Governmental policies, laws and regulations, and other economic factors, including inflation and fluctuations in foreign currency exchange rates and
interest rates, affect the results of operations in these countries.

The following charts and related discussion of the companys Bauxite Interests, Alumina Refining and Primary
Aluminum Facilities and Capacities, Flat-Rolled Products, Engineered Products and Solutions and Corporate Facilities provide additional description of Alcoas businesses. The Alumina segment primarily consists of a series of affiliated
operating entities referred to as Alcoa World Alumina and Chemicals (AWAC). Alcoa owns 60% and Alumina Limited owns 40% of these individual entities. For more information on AWAC, see Exhibit Nos. 10(a) through 10(f)(1) to this report.

Aluminum is one of the most plentiful elements in the earths crust. Aluminum is produced primarily from bauxite, an ore containing aluminum in the form of aluminum oxide, commonly referred to as
alumina. Aluminum is made by extracting alumina from bauxite and then removing oxygen from the alumina. Alcoa processes most of the bauxite that it mines into alumina. The company obtains bauxite from its own resources and from those belonging to
the AWAC enterprise, located in the countries listed in the chart below, as well as pursuant to both long-term and short-term contracts and mining leases. In 2011, Alcoa consumed 43.0 million metric tons (mt) of bauxite from AWAC and its own
resources, 6.4 million mt from related third parties and 1.1 million mt from unrelated third parties. Alcoas present sources of bauxite are sufficient to meet the forecasted requirements of its alumina refining operations for the
foreseeable future. The following table provides information regarding the companys bauxite interests:

Alcoa
Active Bauxite Interests1

Country

Project

Owners Mining Rights (% Entitlement)

Expiration

Date of

Mining

Rights

Australia

Darling Range Mines

Alcoa of Australia Limited (AofA)2 (100%)

2045

Brazil

Poços de Caldas

Alcoa Alumínio S.A. (Alumínio)3 (100%)

2020

4

Trombetas

Mineração Rio do Norte S.A. (MRN)5 (100%)

2046

4

Juruti6

Alcoa World Alumina Brasil Ltda. (AWA Brasil)2 (100%)

2100

4

Guinea

Boké

Compagnie des Bauxites de Guinée (CBG)7 (100%)

2038

8

Jamaica

Clarendon/Manchester

Plateau

Alcoa Minerals of Jamaica, L.L.C.2 (55%)

Clarendon Alumina Production Ltd.9 (45%)

2042

Suriname

Caramacca

Suriname Aluminum Company, L.L.C. (Suralco)2 (55%)

N.V. Alcoa Minerals of Suriname (AMS)10 (45%)

2012

11

Coermotibo

Suralco (55%)

AMS10 (45%)

2033

11

Kaimangrasi

Suralco (55%)

AMS10 (45%)

2033

11

Klaverblad

Suralco (55%)

AMS10 (45%)

2033

11

1

Alcoa also has interests at the following locations that are bauxite resources which do not currently produce bauxite: Cape Bougainville and Mitchell
Plateau in Australia; Az Zabirah in the Kingdom of Saudi Arabia (currently scheduled for completion in 2014 and initially expected to produce 4 million mtpy); and Brownsberg, Coermotibo DS, Lely Mountains, and Nassau, all in eastern Suriname.

2

This entity is part of the AWAC group of companies and is owned 60% by Alcoa and 40% by Alumina Limited.

3

Alumínio is owned 100% by Alcoa.

4

Brazilian mineral legislation does not establish the duration of mining concessions. The concession remains in force until the exhaustion of the
deposit. The company estimates that (i) the concessions at Poços de Caldas will last at least until 2020, (ii) the concessions at Trombetas will last until 2046 and (iii) the concessions at Juruti will last until 2100.
Depending, however, on actual and future needs, the rate at which the deposits are explored and government approval is obtained, the concessions may be extended to (or expire at) a later (or an earlier) date.

5

Alumínio holds an 8.58% total interest, Alcoa World Alumina Brasil Ltda. (formerly Abalco S.A., which merged with Alcoa World Alumina Brasil
Ltda. in December 2008) (AWA Brasil) holds a 4.62% total interest and Alcoa World Alumina LLC (AWA LLC) holds a 5% total interest in MRN. AWA Brasil and AWA LLC are both part of the AWAC group of companies and are owned 60% by Alcoa and 40% by
Alumina Limited. MRN is jointly owned with affiliates of Rio Tinto Alcan Inc., Companhia Brasileira de Alumínio, Companhia Vale do Rio Doce, BHP Billiton Plc (BHP

In September 2009, development of a new bauxite mine was completed in Juruti, state of Para in northern Brazil. The mine is fully operational and
produced 2.6 million mt in 2010 and 3.8 million mt in 2011. In 2012 production is expected to rise to 4.4 million mt.

7

AWA LLC owns a 45% interest in Halco (Mining), Inc. Halco owns 100% of Boké Investment Company, a Delaware company, which owns 51% of CBG. The
Guinean Government owns 49% of CBG, which has the exclusive right through 2038 to develop and mine bauxite in certain areas within a 10,000 square-mile concession in northwestern Guinea.

8

AWA LLC has a bauxite purchase contract with CBG that will provide Alcoa with bauxite through 2013.

9

Clarendon Alumina Production Ltd. is wholly-owned by the Government of Jamaica.

10

AWA LLC owns 100% of N.V. Alcoa Minerals of Suriname (AMS). AWA LLC is part of the AWAC group of companies and is owned 60% by Alcoa and 40% by Alumina
Limited.

11

Subject to Suriname government approval of a pending five-year extension request, mining rights at Caramacca will expire this operating year 2012.
Rights at the remaining Suriname locations all extend until 2033. It is likely that all Suriname current bauxite resources will be exhausted within the next several years. Alcoa is actively exploring and evaluating alternative sources of bauxite in
Suriname. Approximately 1.6 million mt of bauxite was added to the reserves in 2011 from greenfield exploration in the current concession, and the development of the Nassau Plateau bauxite is entering its final phase.

Kingdom of Saudi Arabia Joint Venture

In December 2009, Alcoa and Saudi Arabian Mining Company (Maaden) entered into an agreement setting forth the terms of a joint venture between them to develop a fully integrated aluminum complex in
the Kingdom of Saudi Arabia. In its initial phases, the complex will include a bauxite mine with an initial capacity of 4 million mtpy; an alumina refinery with an initial capacity of 1.8 million mtpy; an aluminum smelter with an initial
capacity of ingot, slab and billet of 740,000 mtpy; and a rolling mill with initial capacity of 380,000 mtpy. The mill is expected to focus initially on the production of sheet, end and tab stock for the manufacture of aluminum cans, and potentially
other products to serve the construction, automotive, and other industries.

The refinery, smelter and rolling mill will be established within
the new industrial zone of Ras Al Khair (formerly Ras Az Zawr) on the east coast of the Kingdom of Saudi Arabia. First production from the aluminum smelter and rolling mill is anticipated in 2013, and first production from the mine and refinery is
expected in 2014.

Total capital investment is expected to be approximately $10.8 billion (SAR 40.5 billion). Maaden owns a 74.9%
interest in the joint venture. Alcoa owns a 25.1% interest in the smelter and rolling mill, with the AWAC group having a 25.1% interest in the mine and refinery. For additional information regarding the joint venture, see the Equity Investments
section of Note I to the Consolidated Financial Statements in Part II, Item 8. (Financial Statements and Supplementary Data).

Alcoa is the worlds leading producer of alumina. Alcoas alumina refining facilities and its worldwide alumina capacity are shown in the
following table:

Alcoa Worldwide Alumina Refining Capacity

Country

Facility

Owners

(% of Ownership)

NameplateCapacity1(000 MTPY)

Alcoa

ConsolidatedCapacity2

(000 MTPY)

Australia

Kwinana

AofA3 (100%)

2,190

2,190

Pinjarra

AofA (100%)

4,234

4,234

Wagerup

AofA (100%)

2,555

2,555

Brazil

Poços de Caldas

Alumínio4 (100%)

390

390

São Luís (Alumar)

AWA Brasil3 (39%)

Rio Tinto Alcan Inc.5 (10%)

Alumínio (15%)

BHP Billiton5
(36%)

3,500

1,890

Jamaica

Jamalco

Alcoa Minerals of Jamaica, L.L.C.3 (55%)

Clarendon Alumina Production Ltd.6 (45%)

1,478

841

Spain

San Ciprián

Alúmina Española, S.A.3 (100%)

1,500

1,500

Suriname

Suralco

Suralco3 (55%)

AMS7
(45%)

2,207

8

2,207

United States

Point Comfort, TX

AWA LLC3 (100%)

2,305

9

2,305

TOTAL

20,359

18,112

1

Nameplate Capacity is an estimate based on design capacity and normal operating efficiencies and does not necessarily represent maximum possible
production.

2

The figures in this column reflect Alcoas share of production from these facilities. For facilities wholly-owned by AWAC entities, Alcoa takes
100% of the production.

3

This entity is part of the AWAC group of companies and is owned 60% by Alcoa and 40% by Alumina Limited.

4

This entity is owned 100% by Alcoa.

5

The named company or an affiliate holds this interest.

6

Clarendon Alumina Production Ltd. is wholly-owned by the Government of Jamaica.

7

AWA LLC owns 100% of N.V. Alcoa Minerals of Suriname (AMS). AWA LLC is part of the AWAC group of companies and is owned 60% by Alcoa and 40% by Alumina
Limited.

8

In May 2009, the Suralco alumina refinery announced curtailment of 870,000 mtpy. The decision was made to protect the long-term viability of the
industry in Suriname. The curtailment was aimed at deferring further bauxite extraction until additional in-country bauxite resources are developed and market conditions for alumina improve. The refinery currently has approximately 793,000 mtpy of
idle capacity.

9

Reductions in production at Point Comfort resulted mostly from the effects of curtailments initiated in late 2008 through early 2009, as a result of
overall market conditions. The reductions included curtailments of approximately 1,500,000 mtpy. Of that original amount, 384,000 mtpy remain curtailed.

As noted above, Alcoa and Maaden entered into an agreement that involves the development of an alumina refinery in the Kingdom of Saudi Arabia. Initial capacity of the refinery is expected to be
1.8 million mtpy. First production is expected in 2014. For additional information regarding the joint venture, see the Equity Investments section of Note I to the Consolidated Financial Statements in Part II, Item 8. (Financial Statements
and Supplementary Data).

The 2.1 million mtpy expansion of the Alumar consortium alumina refinery in São Luís,
Maranhão, completed by the end of 2009, has increased the refinerys nameplate capacity to approximately 3.5 million mtpy, with Alcoas share of such capacity more than doubling to 1.89 million mtpy based on its 54%
ownership stake through Alumínio and AWAC.

In November 2005, Alcoa World Alumina LLC (AWA LLC) and Rio Tinto Alcan Inc. signed a Basic
Agreement with the Government of Guinea that sets forth the framework for development of a 1.5 million mtpy alumina refinery in Guinea. In 2006, the Basic Agreement was approved by the Guinean National Assembly and was promulgated into law. The
Basic Agreement was originally set to expire in November 2008, but has been extended to November 2012. Pre-feasibility studies were completed in 2008. Additional feasibility study work was completed in 2011, and further activities are planned for
2012.

In September 2006, Alcoa received environmental approval from the Government of Western Australia for expansion of the Wagerup alumina
refinery to a maximum capacity of 4.7 million mtpy, a potential increase of over 2 million mtpy. This approval has a term of 5 years and included environmental conditions that must be satisfied before Alcoa can seek construction approval for the
project. The project was suspended in November 2008 due to global economic conditions and the unavailability of a secure long-term energy supply in Western Australia. These constraints continue and as such the project remains under suspension. Alcoa
is therefore seeking an extension of the 2006 environmental approval for the expansion for a further 5 years, with a formal determination expected in spring of 2012.

In 2008, AWAC signed a cooperation agreement with Vietnam National Coal-Minerals Industries Group (Vinacomin) in which they agreed to conduct a joint feasibility study of the Gia Nghia bauxite mine and
alumina refinery project located in Dak Nong Province in Vietnams Central Highlands, with first stage capacity expected to be between 1.0 and 1.5 million mtpy. The cooperation between AWAC and Vinacomin on Gia Nghia is subject to approval
by the Government of Vietnam. If established, the Gia Nghia venture is expected to be 51% owned by Vinacomin, 40% by AWAC and 9% by others.

In December 2008, approximately 15,000 mtpy annualized production was idled at the Portland facility due to overall market conditions. In July 2009, an
additional 15,000 mtpy annualized production was idled, again, due to overall market conditions. This production remains idled.

In May 2010, Alcoa and the Italian Government agreed to a temporary curtailment of the Fusina smelter. As of June 30, 2010, the Fusina smelter was
fully curtailed. Additionally, in January 2012, as part of a restructuring of Alcoas global smelting system, Alcoa announced that it has decided to curtail operations at the Portovesme smelter during the first half of 2012. This action may
lead to the permanent closure of the Portovesme smelter.

8

In January 2012, Alcoa announced that it will be temporarily idling a portion of the smelters in Avilés and La Coruña. The company
intends for this to be completed within the first half of 2012. Avilés and La Coruna will both be operating at approximately 50% of capacity.

9

All production at the Tennessee smelter was idled in March 2009 due to economic conditions. In January 2012, Alcoa announced that it will permanently
shut down and demolish this facility as part of a larger strategy to improve its cost position and competitiveness.

10

Between June and November 2008, three of Rockdales six potlines were idled as a result of uneconomical power prices. The remaining three
operating lines were idled in November 2008 due to uncompetitive power supply and overall market conditions. In January 2012, Alcoa announced that it will permanently shut down and demolish two of the six idled potlines as part of a larger strategy
to improve its cost position and competitiveness.

11

Approximately half of one potline at the Intalco smelter remains idled, or approximately 47,000 mtpy.

12

One potline at the Wenatchee smelter remains idled, or approximately 41,000 mtpy.

As of December 31, 2011, Alcoa had approximately 644,000 mtpy of idle capacity against total Alcoa Consolidated Capacity of 4,518,000 mtpy. These
figures are prior to any changes noted above regarding Rockdale, Tennessee, Avilés, Portovesme and La Coruña.

In January
2011, Alcoa and the China Power Investment Corporation (CPI) signed a Memorandum of Understanding (MOU) to collaborate on a broad range of aluminum and energy projects in China and other locations. The projects under consideration may range from
mining, refining, smelting, aluminum fabrication to collaboration on energy projects. In September 2011, Alcoa and CPI signed a Letter of Intent that provides a framework for the creation of a joint venture, which will focus on producing
high-end fabricated aluminum products in China and leverage Alcoas and CPIs existing footprint and capabilities. The new joint venture will target growth opportunities in the Chinese automotive, aerospace, packaging and consumer
electronics markets.

As noted above, at the end of 2009 Alcoa and Maaden entered into an agreement that involves development of an
aluminum smelter in the Kingdom of Saudi Arabia. In 2010, the joint venture entity, Maaden Aluminium Company signed project financing and broke ground on the construction of the smelter. The smelter is expected to have an initial capacity of
ingot, slab and billet of 740,000 mtpy. First production is expected in 2013.

In 2006, Alcoa and the Government of Iceland, together with the
National Power Company (Landsvirkjun) and the National Transmission Company (Landsnet) began detailed feasibility studies for the development of a 250,000 mtpy aluminum smelter at Bakki near Húsavík in north Iceland. In October
2011, Alcoa informed the Government of Iceland, Landsvirkjun and Landsnet that the power availability and proposed pricing would not support an aluminum smelter, and that the project would not continue.

In December 2008, Alcoa and the Brunei Economic Development Board agreed to further extend an existing MOU to enable more detailed studies into the
feasibility of establishing a modern, gas-powered aluminum smelter in Brunei Darussalam. The MOU extends a memorandum signed originally in 2003. Phase one of the feasibility study will determine scope and dimensions of the proposed facility,
power-delivery strategy, location, as well as an associated port and infrastructure. At completion of phase one, the parties will determine whether a more detailed phase two study

is warranted. If completed, it is expected that the smelter would have an initial operating capacity of 360,000 mtpy with the potential for future increase. In 2011, the MOU was further extended
to enable determination of feasibility.

In 2007, Alcoa and Greenland Home Rule Government entered into an MOU regarding cooperation on a
feasibility study for an aluminum smelter with a 360,000 mtpy capacity in Greenland. The MOU also encompasses a hydroelectric power system and related infrastructure improvements, including a port. In 2008, Greenlands parliament allocated
funding to support the second phase of joint studies with Alcoa and endorsed that the smelter be located at Maniitsoq. In 2010, Alcoa and the Greenland Home Rule Government revised the completion dates for feasibility studies associated with
development of the proposed integrated hydro system and aluminum smelter at Maniitsoq to enable more detailed consideration of aspects of the project related to construction and provision of energy and to allow the Greenland parliament sufficient
time to deliberate and vote on critical aspects of national legislation concerning the project. The feasibility studies were completed in the fourth quarter of 2011. A Greenland Parliamentary vote to allow continued studies for construction and
provision of energy is scheduled for late 2012.

In the fourth quarter of 2011, Alcoa and the Government of Angola, through the ministries of
Energy, Water & Geology, Mines and Industry, entered into an exclusive MOU regarding cooperation on a feasibility study for an aluminum smelter in Angola with a 720,000 mtpy capacity. The MOU also encompasses a hydroelectric power system
and power transmission facilities to be built by the Government and resulting long term purchase power agreement.

Flat-Rolled Products
Facilities

The principal business of the companys Flat-Rolled Products segment is the production and sale of aluminum plate,
sheet and foil. This segment includes rigid container sheet, which is sold directly to customers in the packaging and consumer market. This segment also includes sheet and plate used in the aerospace, automotive, commercial transportation, and
building and construction markets.

As noted above, Alcoa and Maaden entered into an agreement that involves development of a rolling
mill in the Kingdom of Saudi Arabia. In 2010, the joint venture entity, Maaden Rolling Company signed project financing for its rolling mill and broke ground on the construction of the mill. Initial capacity is approximately 380,000 mtpy.
First production is expected in 2013.

As discussed above, in 2011, Alcoa and the CPI signed an MOU followed by a Letter of Intent that
provides a framework for the creation of a joint venture which includes a focus on producing high-end fabricated aluminum products in China. This venture will leverage Alcoas and CPIs existing footprint and capabilities.

Although the company completed the sale of substantially all of its Global Foil Business in 2009, the company continues to manufacture foil for the
end-user market in Itapissuma, Brazil.

Facilities with ownership described as Alcoa (100%) are either leased or owned by the company.

2

Alcoa Bohai Aluminum Products Company Ltd. (Bohai), a wholly owned subsidiary of Alcoa, operates an aluminum rolling facility in Qinhuangdao. It has
completed its expansion and has ramped up production to 60% of capacity in 2011.

3

The Texarkana rolling mill facility has been idle since September of 2009 due to a continued weak outlook in common alloy markets.

Engineered Products and Solutions Facilities

This segment represents Alcoas downstream operations and includes titanium, aluminum, and super alloy investment castings; forgings and fasteners; aluminum wheels; integrated aluminum structural
systems; and architectural extrusions used in the aerospace, automotive, building and construction, commercial transportation, and power generation markets. These products are sold directly to customers and through distributors. Additionally, hard
alloy extrusions products, which are also sold directly to customers and through distributors, serve the aerospace, automotive, commercial transportation, and industrial products markets.

On March 9, 2011, Alcoa completed the acquisition of the aerospace fastener business of TransDigm Group Inc. for approximately $240 million. The business includes Valley-Todeco Inc., with a
facility in Sylmar, California, and

Linread Ltd., with facilities in Redditch and Leicester, both in the United Kingdom. The new business is part of Alcoa Fastening Systems, which is an Alcoa business unit specializing in the
design and manufacture of specialty fastening systems, components, and installation tools for aerospace and industrial applications.

The Latin American soft alloy extrusions business is reported in Corporate Facilities. For more information, see Note Q to the Consolidated Financial Statements in Part II, Item 8. (Financial
Statements and Supplementary Data).

Latin American Extrusions Facilities

COUNTRY

FACILITY

OWNERS1

(% Of Ownership)

PRODUCTS

Brazil

Itapissuma

Alcoa (100%)

Extrusions

Utinga

Alcoa (100%)

Extrusions

Sorocaba

Alcoa (100%)

Extrusions

Tubarão

Alcoa (100%)

Extrusions

1

Facilities with ownership described as Alcoa (100%) are owned by the company, except in the case of the Sorocaba facility, which is a
facility leased by the company.

Sources and Availability of Raw Materials

The major raw materials purchased in 2011 for each of the companys reportable segments are listed below.

Alumina

Flat-Rolled Products

Bauxite

Alloying materials

Caustic soda

Aluminum scrap

Electricity

Coatings

Fuel oil

Electricity

Natural gas

Natural gas

Nitrogen

Primary aluminum (ingot, billet, P1020 , high purity )

Steam

Primary Metals

Engineered Products and Solutions

Alloying materials

Alloying materials

Alumina

Cobalt

Aluminum fluoride

Electricity

Calcined petroleum coke

Natural gas

Cathode blocks

Nickel

Electricity

Primary aluminum (ingot, billet, P1020 , high purity )

Liquid pitch

Resin

Natural gas

Stainless Steel

Steel

Titanium

Generally, other materials are purchased from third party suppliers under competitively-priced supply contracts or
bidding arrangements. The company believes that the raw materials necessary to its business are and will continue to be available.

Energy

Employing the Bayer
process, Alcoa refines alumina from bauxite ore. Alcoa then produces aluminum from the alumina by an electrolytic process requiring large amounts of electric power. Energy and electricity account for

approximately 25% of the companys total alumina refining production costs. Electric power accounts for approximately 26% of the companys primary aluminum production costs. Alcoa
generates approximately 22% of the power used at its smelters worldwide and generally purchases the remainder under long-term arrangements. The paragraphs below summarize the sources of power and the long-term power arrangements for Alcoas
smelters and refineries.

North America  Electricity

The Deschambault, Baie Comeau, and Bécancour smelters in Québec purchase electricity under existing contracts that run through 2015, which will be followed by long-term contracts with
Hydro-Québec first executed in December 2008, revised in 2011 and expiring in 2040, provided that Alcoa completes the modernization of the Baie Comeau smelter by early 2016. The smelter located in Baie Comeau, Québec has historically
purchased approximately 65% of its power needs under the Hydro-Québec contract, receiving the remainder from a 40% owned hydroelectric generating company, Manicouagan Power Limited Partnership (MPLP). Beginning on January 1, 2011, these
percentages changed such that approximately 80% is sourced from Hydro-Québec, with the remaining 20% from MPLP.

The companys
wholly-owned subsidiary, Alcoa Power Generating Inc. (APGI), generates approximately 38% of the power requirements for Alcoas smelters operating in the U.S. The company generally purchases the remainder under long-term contracts. APGI owns and
operates two hydroelectric projects, Tapoco and Yadkin, consisting of eight dams.

New power contracts with Tennessee Valley Authority (TVA)
were executed in June 2011 replacing the previous contracts which were set to expire on June 30, 2011. These three-year contracts cover the sale of APGI Tapoco energy, capacity and renewable energy credits to TVA and the purchase of
supplemental energy from TVA to assist APGI in serving Tennessees rolling operations. APGI also executed an Interconnection Agreement, a Hydro-Coordination Agreement and a Reliability Coordination Agreement pursuant to the unbundling of
previous APGI and TVA agreements which provided for coordinated operation of the hydroelectric and transmission facilities owned by TVA and APGI, as well as the sale of power between APGI and TVA. As part of its long term goal of lowering
Alcoas position on the world aluminum production cost curve, in January of 2012, Alcoa announced the permanent closure of its Alcoa, Tennessee smelter, which has been curtailed since 2009. Demolition and remediation activities related to these
actions will begin in the first half of 2012 and are expected to be completed in 2015.

APGI received a renewed forty-year Federal Energy
Regulatory Commission (FERC) license for the Tapoco project in 2005. The relicensing process continues for the Yadkin hydroelectric project license. In 2007, APGI filed with FERC a Relicensing Settlement Agreement with the majority of the interested
stakeholders that broadly resolved open issues. The National Environmental Policy Act process is complete, with a final environmental impact statement having been issued in April 2008. The remaining requirement for the relicensing was the issuance
by North Carolina of the required water quality certification under Section 401 of the Clean Water Act. The Section 401 water quality certification was issued on May 7, 2009, but was appealed, and has been stayed since late May 2009
pending substantive determination on the appeal. On December 1, 2010, APGI received notice from North Carolina of its revocation of the Section 401 water quality certification. APGI has appealed the revocation and a hearing has been
scheduled. APGI received a year-to-year license renewal from FERC in May 2008, and will continue to operate under annual licenses until a new Section 401 certification is issued and the FERC relicensing process is complete. Since the first
quarter of 2010 when Alcoa announced the permanent closure of the Badin, North Carolina smelter, power generated from APGIs Yadkin system is largely being sold to an affiliate, Alcoa Power Marketing LLC, and then sold into the wholesale
market. Proceeds from sales to the wholesale market are used to offset higher priced power contracts at other U.S. operations.

APGI generates
substantially all of the power used at the companys Warrick smelter using nearby coal reserves. Since May 2005, Alcoa has owned the nearby Friendsville, Illinois coal reserves, with the mine being operated by Vigo Coal Company, Inc. The mine
is producing approximately one million tons of coal per year. In June 2011, the Red Brush West Mine, owned by Alcoa and operated by Vigo Coal, was opened and will produce approximately 60,000 tons per month over an eighteen-month period. In 2011,
the two owned mines provided approximately 61% of the Warrick power plants requirements. The balance of the coal used is purchased principally from local Illinois Basin coal producers pursuant to term contracts of varying duration.

In the northwest, Alcoa operated under a contract with Chelan County Public Utility District (Chelan PUD)
located in the State of Washington that was sufficient to supply about half of the capacity of the Wenatchee smelter through October 2011. In November 2011, a new contract executed between Alcoa and Chelan PUD became effective, under which Alcoa
receives approximately 26% of the hydropower output of Chelan PUDs Rocky Reach and Rock Island dams, which will continue to supply about half of the capacity of the Wenatchee smelter.

Following the invalidation by the 9th Circuit Court of Appeals of the 2006-2011 contract with the Bonneville Power Administration (BPA) under which Alcoa
was receiving financial benefits to reduce the cost of power purchased from the market to partially operate the Intalco smelter, Alcoa and BPA signed a new contract providing for the sale of physical power at the Northwest Power Act mandated
industrial firm power (IP) rate, for the period from December 22, 2009  May 26, 2011 (17 months). That initial period has been extended through May 26, 2012. The contract also contains a provision for a five-year
extension if certain financial tests can be met.

Prior to 2007, power for the Rockdale smelter in Texas was historically supplied from
company-owned generating units and units owned by Luminant Generation Company LLC (formerly TXU Generation Company LP) (Luminant), both of which used lignite supplied by the companys Sandow Mine. Upon completion of lignite mining in the Sandow
Mine in 2005, lignite supply transitioned to the formerly Alcoa-owned Three Oaks Mine. The company retired its three wholly-owned generating units at Rockdale (Sandow Units 1, 2 and 3) in late 2006, and transitioned to an arrangement under which
Luminant is to supply all of the Rockdale smelters electricity requirements under a long-term power contract that does not expire until at least the end of 2038, with the parties having the right to terminate the contract after 2013 if there
has been an unfavorable change in law or after 2025 if the cost of the electricity exceeds the market price. In August 2007, Luminant and Alcoa closed on the definitive agreements under which Luminant has constructed and operates a new circulating
fluidized bed power plant (Sandow Unit 5) adjacent to the existing Sandow Unit 4 and, in September 2007, on the sale of the Three Oaks Mine to Luminant. Concurrent with entering into the agreements under which Luminant constructed and operates
Sandow Unit 5, Alcoa and Luminant entered into a power purchase agreement whereby Alcoa purchased power from Luminant. That Unit 5 power purchase agreement was terminated by Alcoa, effective December 1, 2010. In June 2008, Alcoa temporarily
idled half of the capacity at the Rockdale smelter and in November 2008 curtailed the remainder of Rockdales smelting capacity. In January 2012, Alcoa announced that it will permanently close two of the six idled potlines at its Rockdale,
Texas smelter. Demolition and remediation activities related to these actions will begin in the first half of 2012 and are expected to be completed in 2013.

In the northeast, the purchased power contracts for both the Massena East and Massena West smelters in New York expire December 31, 2013, subject to their terms and conditions. In December 2007,
Alcoa and The New York Power Authority (NYPA) reached agreement in principle on a new energy contract to supply the Massena East and Massena West smelters for 30 years, beginning on January 1, 2014, following an amendment in January 2011. The
definitive agreement implementing this arrangement became effective February 24, 2009. A subsequent amendment, providing Alcoa additional time to complete the design and engineering work for its Massena East modernization plan, and providing
for the return of 256 megawatts (MW) of power to NYPA while Massena East was idled, was entered into effective April 16, 2009 and was superseded by the January 2011 amendment. Implementation of the Massena East modernization plan is subject to
further approval of the Alcoa Board of Directors. Alcoa restarted production at Massena East in the first quarter of 2011.

The Mt. Holly
smelter in South Carolina purchases electricity from Santee Cooper under a contract that was amended and restated in 2010, and expires December 31, 2015. The contract includes a provision for follow-on service at the then current rate schedule
for industrial customers.

Australia  Electricity

Power is generated from extensive brown coal deposits covered by a long-term mineral lease held by Alcoa of Australia Limited (AofA), and that power currently provides approximately 40% of the electricity
for the companys smelter in Point Henry, Victoria. The State Electricity Commission of Victoria provides the remaining power for this smelter, and all power for the Portland smelter, under contracts with AofA and Eastern Aluminium (Portland)
Pty Ltd,

a wholly-owned subsidiary of AofA, in respect of its interest in Portland, that extend to 2014 and 2016, respectively. Upon the expiry of these contracts both smelters will purchase power from
the Australian National Energy Market (NEM) variable spot market. In March 2010, AofA and Eastern Aluminium (Portland) Pty Ltd (in respect of the Portland Smelter only) separately entered into fixed for floating swap contracts with Loy Yang Power in
order to manage exposure to variable energy rates from the NEM from the date of expiry of the current contracts with the State Electricity Commission of Victoria until December 2036.

Brazil  Electricity

The Alumar smelter is supplied by Eletronorte (Centrais Elétricas do Norte do Brasil S.A.) under a long-term power purchase agreement expiring in December 2024. Eletronorte has supplied the Alumar
smelter from the beginning of its operations in 1984. Since 2006, Alcoa Alumínio S.A.s (Alumínio) remaining power needs for the smelter are supplied from self-generated energy. Beginning in March 2012, the Eletronorte supply will
be reduced by the amount of 160 MW that will be supplied through power self-generation.

Alumínio owns a 30.99% stake in Maesa 
Machadinho Energética S.A., which is the owner of 83.06% of the Machadinho hydroelectric power plant located in southern Brazil. Alumínios share of the plants output is supplied to the Poços de Caldas smelter, and is
sufficient to cover 55% of its operating needs.

Alumínio has a 42.18% interest in Energética Barra Grande S.A.  BAESA,
which built the Barra Grande hydroelectric power plant in southern Brazil. Alumínios share of the power generated by BAESA covers the remaining power needs of the Poços de Caldas smelter and, as noted above, a portion of the
power needs of Alumínios interest in the Alumar smelter.

Alumínio also has 34.97% share in Serra do Facão in the
southeast of Brazil, which began commercial generation in August 2010. Alumínios share of the Serra do Facão output is currently being sold in the market.

Alumínio is also participating in the Estreito hydropower project in northern Brazil, holding a 25.49% share. Four out of its eight generation units began commercial operation in 2011. The
remaining four generation units are expected to begin commercial operation in 2012.

With Machadinho, Barra Grande, Serra do Facão and
Estreito, Alumínios current power self-sufficiency is approximately 65%, to meet a total energy demand of approximately 690 MW from Brazilian primary aluminum plants.

From March 26, 2012, Estreito power will supply the Alumar smelter replacing 160MW of power under the Eletronorte contract, reducing it from 423MW to 263MW. Power from Serra do Facão will also
replace Eletronorte starting January 1, 2014. Until then, power from Serra do Facão will be sold externally.

Consortia in which
Alumínio participates have received concessions for the Pai Querê hydropower project in southern Brazil (Alumínios share is 35%) and the Santa Isabel hydropower project in northern Brazil (Alumínios share is
20%). Development of these concessions has not yet begun.

Europe  Electricity

Until December 31, 2005, the company purchased electricity for its smelters at Portovesme and Fusina, Italy under a power supply structure approved
by the European Commission (EC) in 1996. That measure provided a competitive power supply to the primary aluminum industry and was not considered state aid from the Italian Government. In 2005, Italy granted an extension of the regulated electricity
tariff that was in force until December 31, 2005 through November 19, 2009. (The extension was originally through 2010, but the date was changed by legislation adopted by the Italian Parliament effective on August 15, 2009.) In July
2006, the EC announced that it had opened an investigation to establish whether the extension of the regulated electricity tariff granted by Italy complied with

European Union (EU) state aid rules. On November 19, 2009, the EC announced a decision in its investigation, stating that the extension of the tariff by Italy constituted unlawful state aid,
in part, and ordered the Italian government to recover a portion of the benefit Alcoa received since January 2006 (including interest). On April 19, 2010, Alcoa filed an appeal against the decision of the EC with the European General Court.
Additionally on May 22, 2010, Alcoa filed an application for interim measures (suspension of decision) in connection with the EC at the European General Court. On July 12, 2010, the European General Court dismissed the request for interim
measures due to lack of urgency. Alcoa appealed this ruling on September 10, 2010. This appeal was dismissed by the European Court of Justice on December 16, 2011. On February 25, 2010, the Italian government issued a decree law (No.3
2010) implementing a request from the electrical transmission system operator to reinforce the level of system security on the islands of Sicily and Sardinia. The decree law provides the means for end-consumers to provide and, be paid for,
interruptible services up to December 31, 2012. On May 26, 2010, the EC ruled that scheme introduced by the decree law to be a non-aid. Alcoa applied for and gained rights to sell this service in Sardinia from the Portovesme
smelter. Additional details about this matter are in Part I, Item 3 (Legal Proceedings) of this report. On July 29, 2010, Alcoa reached agreement with a power supplier to enter into a new contract expiring on December 31, 2012. This
arrangement would have enabled operation of the Portovesme smelter through December 31, 2012. In January 2012, Alcoa announced that it decided to curtail operations at its Portovesme smelter. This curtailment is expected to be completed in the
first half of 2012. This curtailment may lead to the permanent closure of the facility. Additionally, in 2010, the Fusina smelter was temporarily curtailed due to high energy costs. As of June 30, 2010, the Fusina smelter was fully curtailed.

Alcoas smelters at San Ciprián, La Coruña and Avilés, Spain purchase electricity under bilateral power contracts
that commenced in May 2009 and are due to expire on December 31, 2012. Prior to the establishment of power supply under the bilateral contracts, Alcoa was supplied under a regulated power tariff. On January 25, 2007, the EC announced that
it has opened an investigation to establish whether the regulated electricity tariffs granted by Spain comply with EU state aid rules. Alcoa operated in Spain for more than ten years under a power supply structure approved by the Spanish Government
in 1986, an equivalent tariff having been granted in 1983. The investigation is limited to the year 2005 and it is focused both on the energy-intensive consumers and the distribution companies. It is Alcoas understanding that the Spanish
tariff system for electricity is in conformity with all applicable laws and regulations, and therefore no state aid is present in that tariff system. A decision by the EC has not yet been made. If the ECs investigation concludes that the
regulated electricity tariffs for industries are unlawful, Alcoa will have an opportunity to challenge the decision in the EU courts. Due to an uncompetitive energy position, combined with rising raw material costs and falling aluminum prices, in
early January 2012, Alcoa announced its intentions to partially and temporarily curtail its La Coruña and Avilés, Spain smelters. The curtailments are expected to be complete by the first half of 2012.

In March 2009, Alcoa and Orkla ASA exchanged respective stakes in the Sapa AB and Elkem Aluminium ANS companies. Pursuant to the exchange, Alcoa assumed
100% ownership of the two smelters in Norway, Lista and Mosjøen, at the end of the first quarter of 2009. These smelters have long-term power arrangements in place which continue until at least 2019.

Iceland  Electricity

Alcoas Fjarðaál smelter in eastern Iceland began operation in 2007. Central to those operations is a 40-year power contract under which Landsvirkjun, the Icelandic national power company,
built the Kárahnjúkar dam and hydro-power project, and supplies competitively priced electricity to the smelter. In late 2009, Iceland imposed two new taxes on power intensive industries, both for a period of three years, from 2010
through 2012. One tax is based on energy consumption; the other is a pre-payment of certain other charges, and will be recoverable from 2013 through 2015.

North America  Natural Gas

In order to supply its refineries and smelters in the
U.S. and Canada, Alcoa generally procures natural gas on a competitive bid basis from a variety of sources including producers in the gas production areas and independent gas marketers. For Alcoas larger consuming locations in Canada and the
U.S., the gas commodity and the interstate

pipeline transportation are procured to provide increased flexibility and reliability. Contract pricing for gas is typically based on a published industry index or New York Mercantile Exchange
(NYMEX) price. The company may choose to reduce its exposure to NYMEX pricing by hedging a portion of required natural gas consumption.

Australia  Natural Gas

Alcoa of Australia (AofA) holds a 20% equity interest in a
consortium that bought the Dampier-to-Bunbury natural gas pipeline in October 2004. This pipeline transports gas from the northwest gas fields to Alcoas alumina refineries and other users in the Southwest of Western Australia. AofA uses gas to
co-generate steam and electricity for its alumina refining processes at the Kwinana, Pinjarra and Wagerup refineries. Approximately 85% of AofAs gas supplies are under long-term contract out to 2020. AofA is progressing multiple supply
options to replace expiring contracts, including investing directly in projects that have the potential to deliver cost-based gas.

Patents, Trade Secrets and Trademarks

The company believes that its domestic and international patent, trade secret and trademark assets provide it with a significant competitive advantage. The companys rights under its patents, as well
as the products made and sold under them, are important to the company as a whole and, to varying degrees, important to each business segment. The patents owned by Alcoa generally concern particular products or manufacturing equipment or techniques.
Alcoas business as a whole is not, however, materially dependent on any single patent, trade secret or trademark.

The company has a
number of trade secrets, mostly regarding manufacturing processes and material compositions that give many of its businesses important advantages in their markets. The company continues to strive to improve those processes and generate new material
compositions that provide additional benefits.

The company also has a number of domestic and international registered
trademarks that have significant recognition within the markets that are served. Examples include the name Alcoa and the Alcoa symbol for aluminum products, Howmet metal castings, Huck® fasteners, Kawneer® building
panels and Dura-Bright® wheels with easy-clean surface treatments. The companys rights under its
trademarks are important to the company as a whole and, to varying degrees, important to each business segment.

Competitive Conditions

Alcoa is subject to highly competitive conditions in all aspects of its aluminum and non-aluminum businesses. Competitors include a
variety of both U.S. and non-U.S. companies in all major markets. Price, quality, and service are the principal competitive factors in Alcoas markets. Where aluminum products compete with other materials  such as steel and plastics for
automotive and building applications; magnesium, titanium, composites, and plastics for aerospace and defense applications  aluminums diverse characteristics, particularly its light weight, recyclability, and flexibility are also
significant factors. For Alcoas segments that market products under Alcoas brand names, brand recognition, and brand loyalty also play a role. In addition Alcoas competitive position depends, in part, on the companys access
to an economical power supply to sustain its operations in various countries.

Research and Development

Alcoa, a technology leader in the aluminum industry, engages in research and development programs that include process and product development, and basic
and applied research. Expenditures for research and development (R&D) activities were $184 million in 2011, $174 million in 2010, and $169 million in 2009.

Most of the major process areas within the company have a Technology Management Review Board (TMRB) or Center of Excellence (CoE) consisting of members from various worldwide locations. Each TMRB or CoE
is responsible for formulating and communicating a technology strategy for the corresponding process area, developing and managing the technology portfolio and ensuring the global transfer of technology. Alternatively, certain business

units conduct these activities and research and development programs within the worldwide business unit, supported by the Alcoa Technical Center (ATC). Technical personnel from the TMRBs, ATC and
such business units also participate in the corresponding Market Sector Teams. In this manner, research and development activities are aligned with corporate and business unit goals.

During 2011, the company continued to work on new developments for a number of strategic projects in all business segments. In Primary Metals, progress was made on inert anode technology with tests
carried out on a pilot scale. Progress has been successful in many respects as a result of full pot testing of anode assemblies, although there remain technical and cost targets to achieve. If the technology proves to be commercially feasible, the
company believes that it would result in significant operating cost savings, and generate environmental benefits by reducing certain emissions and eliminating carbon dioxide. No timetable has been established for commercial use. The company is also
continuing to develop the carbothermic aluminum process, which is in the research and development phase. The technology holds the potential to produce aluminum at a lower cost, driven by reduced conversion costs, lower energy requirements and
lower emissions at a lower capital cost than traditional smelting.

The company continued its progress leveraging new science and technologies
in 2011. For example, riblets that reduce aerodynamic drag have been analyzed and produced on a test basis. Self-cleaning nano coatings have been demonstrated on building products (an example of such was commercialized in 2011 as EcoClean, which is
the worlds first coil-coated aluminum architectural panel that helps clean itself and the air around it). Energy saving sensing devices are being integrated in company manufacturing plants. Integrated thermal management products for consumer
electronics have been developed and are being validated by our customers.

A number of products were commercialized in
2011 including new fasteners, new aerospace alloy products for reducing structural weight, cost and production risk, self-cleaning EcoClean® coated building panels, and new armor plate alloy solutions. The company continues to develop its Micromill technology. Scale-up to full commercial width
has been successful. Product development continues, and commercialization has commenced. In addition, previously developed products such as Alcoas LvL ONE® wide base aluminum wheel continue to receive accolades, such as being selected as a Top 5 Product of 2010 by Heavy Duty Aftermarket Journal.

Alcoas research and development focus is on product development to support sustainable, profitable growth; manufacturing technologies
to improve efficiencies and reduce costs; and on environmental risk reductions. Environmental technologies continue to be an area of focus for the company, with projects underway that address emissions reductions, the reduction of spent pot lining,
advanced recycling, and the beneficial use of bauxite residue.

As a result of product development and technological advancement, the company
continues to pursue patent protection in jurisdictions throughout the world. At the end of 2011, the companys worldwide patent portfolio consisted of 870 pending patent applications and 1,895 granted patents.

Environmental Matters

Information relating to environmental matters is included in Note N to the Consolidated Financial Statements under the caption Environmental
Matters on pages 114-117.

Employees

Total worldwide employment at the end of 2011 was approximately 61,000 employees in 31 countries. About 31,000 of these employees are represented by labor unions. The company believes that relations with
its employees and any applicable union representatives generally are good.

In the U.S., approximately 9,500 employees are represented by
various labor unions. The largest of these is the master collective bargaining agreement between Alcoa and the United Steelworkers (USW). This agreement covers 10 locations and approximately 6,100 U.S. employees. It expires on May 15, 2014.
There are 16 other collective

bargaining agreements in the U.S. with varying expiration dates. Collective bargaining agreements with varying expiration dates also cover about 6,300 employees in Europe, 3,900 employees in
Russia, 4,000 employees in Central and South America, 3,800 employees in Australia, 1,100 employees in China and 2,200 employees in Canada.

Executive Officers of the Registrant

The names, ages, positions and areas of responsibility of the executive officers of the company as of February 16, 2012 are listed below.

Nicholas J. Ashooh, 57, Vice President, Corporate Affairs. Mr. Ashooh was elected to his current position upon joining Alcoa in January 2010. Before joining Alcoa, he was Senior Vice President
 Communications of American International Group, Inc. (AIG), a leading international insurance organization, from September 2006 to January 2010. Prior to AIG, he held executive communication positions in the electric utility industry as
Senior Vice President, Corporate Communications of American Electric Power Service Corporation (2000 to 2006); Vice President, Public Affairs and Corporate Communications of Niagara Mohawk Power Corporation (1992 to 2000); and Director, Corporate
Communications of Public Service of New Hampshire (1978 to 1990). From 1990 to 1992, he was Vice President, Corporate Communications of Paramount Communications Inc., a global entertainment and publishing company.

Chris L. Ayers, 45, Executive Vice President  Alcoa and Group President, Global Primary Products. Mr. Ayers was elected an Alcoa
Executive Vice President in August 2010 and was named Group President, Global Primary Products effective May 18, 2011. He served as Chief Operating Officer of Global Primary Products from August 2010 to May 18, 2011. He was elected a Vice
President of Alcoa in April 2010. Mr. Ayers joined Alcoa in February 2010 as Chief Operating Officer, Alcoa Cast, Forged and Extruded Products. Before joining Alcoa, from 1999 through December 2008, Mr. Ayers served in various management
roles at Precision Castparts Corp., including as Executive Vice President from May 2006 to July 2008, President  PCC Forgings Division from December 2006 to July 2008, President  Wyman Gordon Forgings from 2004 to December 2006, and Vice
President/General Manager from 2003 to 2004.

John D. Bergen, 69, Vice President, Human Resources. Mr. Bergen was named to his
current position effective February 1, 2010. He joined Alcoa in November 2008 as Vice President, Communications and from that time to his most recent appointment had responsibility for global external and internal communications, government
affairs and e-business for Alcoa. Mr. Bergen was Senior Vice President, Corporate Affairs and Marketing, of Siemens Corporation, the U.S. arm of Siemens AG, from 2001 to 2008. Before that, he held senior communication positions for CBS
Corporation and Westinghouse Electric Corporation (1996 to 1998). From 1991 to 1996, he was President and Chief Executive Officer of GCI Group, an international public relations and government affairs firm.

Graeme W. Bottger, 53, Vice President and Controller. Mr. Bottger was elected to his current position effective August 1, 2010. He
joined Alcoa in 1980 as a product accountant trainee at Alcoas Point Henry facility in Australia and from that time to his most recent appointment held a series of accounting and financial management positions in Alcoas Australian
smelting, rolling, extrusion, foil and alumina businesses and Alcoas corporate office. Mr. Bottger was Chief Financial Officer of Alcoas Engineered Products and Solutions business group from 2005 to August 2010. From 2003 to 2005,
he was Vice President, Sales, for Alcoa Home Exteriors. From 2001 to 2003, Mr. Bottger was Vice President, Finance for Alcoa Home Exteriors. Before his move to the United States in 1999 to accept an assignment in Alcoas financial analysis
and planning department, Mr. Bottger held the position of Chief Financial Officer for Alcoas joint venture with Kobe Steel, Ltd. in Australia (Kaal Australia Pty. Ltd.).

Olivier M. Jarrault, 50, Executive Vice President  Alcoa and Group President, Engineered Products and Solutions. Mr. Jarrault was elected an Alcoa Executive Vice President effective
January 21, 2011 and was named Group President of Engineered Products and Solutions effective January 1, 2011. He served as Chief Operating Officer of Engineered Products and Solutions from February 2010 to January 1, 2011.
Mr. Jarrault joined Alcoa in 2002 when Alcoa acquired Fairchild Fasteners from The Fairchild Corporation. He served as President of Alcoa Fastening Systems from 2002 to February 2010. He was elected a Vice President of Alcoa in November 2006.

Klaus Kleinfeld, 54, Director, Chairman of the Board and Chief Executive Officer. Mr. Kleinfeld
was elected to Alcoas Board of Directors in November 2003 and became Chairman on April 23, 2010. He has been Chief Executive Officer of Alcoa since May 8, 2008. He was President and Chief Executive Officer from May 8, 2008 to
April 23, 2010. He was President and Chief Operating Officer of Alcoa from October 1, 2007 to May 8, 2008. Mr. Kleinfeld was President and Chief Executive Officer of Siemens AG, the global electronics and industrial conglomerate,
from January 2005 to June 2007. He served as Deputy Chairman of the Managing Board and Executive Vice President of Siemens AG from 2004 to January 2005. He was President and Chief Executive Officer of Siemens Corporation, the U.S. arm of Siemens AG,
from 2002 to 2004.

Charles D. McLane, Jr., 58, Executive Vice President and Chief Financial Officer. Mr. McLane was
elected an Alcoa Executive Vice President in September 2007 and was elected Vice President and Chief Financial Officer of Alcoa in January 2007. He was elected Vice President and Corporate Controller in October 2002. He joined Alcoa in May 2000 as
director of investor relations, following Alcoas merger with Reynolds Metals Company. He became Assistant Treasurer of Reynolds in 1999 and Assistant Controller of that company in 1995.

Kay H. Meggers, 47, Executive Vice President  Alcoa and Group President, Global Rolled Products. Mr. Meggers was elected an Alcoa Executive Vice President in December 2011. He was named
Group President, Global Rolled Products effective November 14, 2011. Before his most recent appointment, he led Alcoas Business Excellence/Corporate Strategy resource unit and was also responsible for overseeing Alcoas Asia-Pacific
region. He joined Alcoa in February 2010 as Vice President, Corporate Initiatives, a position responsible for planning and coordinating major strategic initiatives from enhancing technology and innovation as part of the Alcoa Technology
Advantage program to spearheading growth strategies for China and Brazil. He was elected a Vice President of Alcoa in June 2011. Before joining Alcoa, Mr. Meggers was Senior Vice President at Siemens U.S. Building Technologies Division and
served for three years as Business Unit Head of Building Automation. In 2006 he served for nine months as Division Head of Fire Safety, also part of Siemens U.S. Building Technologies Division. Between 2002 and 2005, he served as Vice President of
Strategic Planning at Siemens U.S.

Kurt R. Waldo, 56, Executive Vice President, Chief Legal and Compliance Officer. Mr. Waldo was
elected to his current position effective January 20, 2012. He joined Alcoas Legal Department in 1980 and served in a series of positions of increasing responsibility in the Legal Department from that time to his most recent appointment.
He was elected Vice President and General Counsel of Alcoa in September 2008; Deputy General Counsel in April 2007; and Assistant General Counsel in August 1999. He served as Senior Counsel from 1991 to August 1999; and as European Regional Counsel
from 1987 to 1991, based in Lausanne, Switzerland.

Item 1A. Risk Factors.

Alcoas business, financial condition or results of operations may be impacted by a number of factors. In addition to the factors discussed
separately in this report, the following are the most significant factors that could cause Alcoas actual results to differ materially from those projected in any forward-looking statements:

The aluminum industry generally remains highly cyclical and is influenced by a number of factors including global economic conditions.

The aluminum industry generally is highly cyclical. Alcoa is subject to cyclical fluctuations in global economic conditions and aluminum end-use markets.
Demand for our products is sensitive to these fluctuations. For example, 2011 was a turbulent year in the world economy, characterized by an uneven recovery in many regions and prolonged volatility and crisis in others, namely Europe. Demand for
aluminum started strong at the beginning of the year but weakened in the second half. While Alcoa believes that the long-term prospects for aluminum remain bright, the company is unable to predict the future course of industry variables or the
strength, pace or sustainability of the economic recovery and the effects of government intervention. Another major economic downturn, a prolonged recovery period, or disruptions in the financial markets could have a material, adverse effect on
Alcoas business or financial condition or results of operations.

Market-driven balancing of global aluminum supply and demand may be disrupted by non-market forces or
other impediments to production closures.

Alcoa and certain other aluminum producers have recently announced independent plans to cut
aluminum production capacity. For Alcoa these decisions were a function of market-driven factors. However, the existence of non-market forces on global aluminum industry capacity, such as political pressures in certain countries to keep jobs or to
maintain or further develop industry self-sufficiency, may prevent or delay the closure or curtailment of certain producers smelters, irrespective of their position on the industry cost curve. Other production cuts may be impeded by long-term
contracts to buy power or raw materials. Persistent industry overcapacity may result in a weak pricing environment and margin compression for aluminum producers, including Alcoa.

A reduction in demand (or a lack of increased demand) for aluminum by China, Europe or a combined number of other countries may negatively impact Alcoas results.

The aluminum industrys demand is highly correlated to economic growth. The Chinese market is a significant source of global demand for commodities,
including aluminum. A sustained slowdown in Chinas economic and aluminum demand growth that is not offset by increased aluminum demand growth in other emerging economies such as India, Brazil, and several South East Asian countries, or the
combined slowdown in other markets, could have an adverse effect on the global supply and demand for aluminum and aluminum prices. The European sovereign debt crisis could have an adverse effect on European supply and demand for aluminum and
aluminum products.

Alcoa could be materially adversely affected by declines in aluminum prices.

The price of aluminum is frequently volatile and changes in response to general economic conditions, expectations for supply and demand growth or
contraction, and the level of global inventories. The influence of hedge funds and other financial institutions participating in commodity markets has also increased in recent years, contributing to higher levels of price volatility. In 2011, the
LME price reached a high in excess of $2,700 per metric ton and by the end of the year declined to below $2,000 per metric ton. This decline had a negative impact on Alcoas results in the second half of the year. Continued high LME inventories
could lead to a reduction in the price of aluminum. A sustained weak aluminum pricing environment or a deterioration in aluminum prices could have a material, adverse effect on Alcoas business, financial condition, results of operations or
cash flow.

Alcoas operations consume substantial amounts of energy; profitability may decline if energy costs rise or if energy
supplies are interrupted.

Alcoas operations consume substantial amounts of energy. Although Alcoa generally expects to meet the
energy requirements for its alumina refineries and primary aluminum smelters from internal sources or from long-term contracts, the following factors could affect Alcoas results of operations:

unavailability of electrical power or other energy sources due to droughts, hurricanes or other natural causes;



unavailability of energy due to energy shortages resulting in insufficient supplies to serve consumers;



interruptions in energy supply or unplanned outages due to equipment failure or other causes; or



curtailment of one or more refineries or smelters due to inability to extend energy contracts upon expiration or negotiate new arrangements on
cost-effective terms or unavailability of energy at competitive rates.

Alcoas profitability could be adversely
affected by increases in the cost of raw materials or by significant lag effects for decreases in commodity or LME-linked costs.

Alcoas results of operations are affected by changes in the cost of raw materials, including energy, carbon products, caustic soda and other key
inputs, as well as freight costs associated with transportation of raw materials to refining and

smelting locations. Higher than expected input costs could lead to underperformance. Alcoa may not be able to offset fully the effects of higher raw material costs or energy costs through price
increases, productivity improvements or cost reduction programs. Similarly, Alcoas operating results are affected by significant lag effects for declines in key costs of production that are commodity or LME-linked. For example, declines in
LME-linked costs of alumina and power during a particular period may not be adequate to offset sharp declines in metal price in that period.

Alcoa is exposed to fluctuations in foreign currency exchange rates and interest rates, as well as inflation, and other economic factors in the
countries in which it operates.

Economic factors, including inflation and fluctuations in foreign currency exchange rates and interest
rates, competitive factors in the countries in which Alcoa operates, and continued volatility or deterioration in the global economic and financial environment could affect Alcoas revenues, expenses and results of operations. Changes in the
valuation of the U.S. dollar against other currencies, particularly the Australian dollar, Brazilian real, Canadian dollar, Euro and Norwegian kroner, may affect profitability as some important raw materials are purchased in other currencies,
whereas products are generally sold in U.S. dollars.

Alcoa may not be able to realize expected benefits from its growth projects or
streamlining portfolio strategy.

Alcoas growth projects include the Maaden joint venture, the now-completed
São Luís refinery expansion, the greenfield Juruti bauxite mine, the ongoing Estreito hydroelectric power project in Brazil and the China and Russia growth projects. Management believes that these projects will be beneficial
to Alcoa; however, there is no assurance that these benefits will be realized, whether due to unfavorable global economic conditions, currency fluctuations, or other factors, or that the remaining construction, start-up activities and testing on the
Estreito project will be completed as planned by the targeted completion date.

Alcoa has made and may continue to plan and execute
acquisitions and divestitures and take other actions to streamline and grow its portfolio. There can be no assurance that such actions will be undertaken or completed in their entirety as planned or beneficial to Alcoa or that targeted completion
dates will be met. In addition, acquisitions present significant challenges and risks relating to the integration of the business into the company, and there can be no assurances that the company will manage acquisitions successfully. Alcoa may face
barriers to exit from unprofitable businesses or operations, including high exit costs or objections from various stakeholders.

Alcoa may
not be able to successfully realize goals established in each of its four business segments or by the dates targeted for such goals.

Alcoa has announced targets for each of its four major business segments, including the following:



by 2015, driving the alumina business down into the first quartile of the industry cost curve and realizing profit levels (per mt) that are beyond its
recent historic norms;



by 2015, driving the smelting business down into the second quartile of the industry cost curve and increasing profitability (per mt) beyond the
companys past ten-year average;



by 2013, increasing the revenues of the Flat-Rolled Products segment by $2.5 billion by growing 50% faster than the market and achieving performance
levels above its historic norms; and



by 2013, increasing the revenues of the Engineered Products and Solutions segment by $1.6 billion, through market growth, new product introductions,
and share gains.

There can be no assurance that all of these initiatives will be completed as anticipated or that Alcoa
will be able to successfully realize these goals at the targeted levels or by the projected dates.

Joint ventures and other strategic
alliances may not be successful.

Alcoa participates in joint ventures and has formed strategic alliances and may enter into other similar
arrangements in the future. For example, in December 2009, Alcoa announced that it formed a joint venture with Maaden, the Saudi Arabian Mining Company, to develop a fully integrated aluminum complex (including a bauxite mine, alumina

refinery, aluminum smelter and rolling mill) in the Kingdom of Saudi Arabia. In 2011, Alcoa entered into a Memorandum of Understanding followed by a Letter of Intent with China Power Investment
Corporation (CPI) which provides a framework for the creation of a joint venture entity with plans to target growth in the Chinese automotive, aerospace, packaging, and consumer electronic markets. Although the company has, in relation to the
Maaden joint venture and its other existing joint ventures and strategic alliances, sought to protect its interests, joint ventures and strategic alliances necessarily involve special risks. Whether or not Alcoa holds majority interests or
maintains operational control in such arrangements, its partners may:



have economic or business interests or goals that are inconsistent with or opposed to those of the company;



exercise veto rights so as to block actions that Alcoa believes to be in its or the joint ventures or strategic alliances best interests;



take action contrary to Alcoas policies or objectives with respect to its investments; or



as a result of financial or other difficulties, be unable or unwilling to fulfill their obligations under the joint venture, strategic alliance or
other agreements, such as contributing capital to expansion or maintenance projects.

In addition, the joint venture with
Maaden is subject to risks associated with large infrastructure construction projects, including the consequences of non-compliance with the timeline and other requirements under the gas supply arrangements for the joint venture. Also, while
financing is in place for the project, there can be no guaranteed assurance that the project as a whole will be completed within budget or that the project phases will be completed by their targeted completion dates, or that it or Alcoas other
joint ventures or strategic alliances will be beneficial to Alcoa, whether due to the above-described risks, unfavorable global economic conditions, increases in construction costs, currency fluctuations, political risks, or other factors.

Alcoa faces significant competition.

As discussed in Part I, Item 1. (Business  Competitive Conditions) of this report, the markets for most aluminum products are highly competitive. Alcoas competitors include a variety of
both U.S. and non-U.S. companies in all major markets, including some that are subsidized. In addition, aluminum competes with other materials, such as steel, plastics, composites, and glass, among others, for various applications in Alcoas
key markets. The willingness of customers to accept substitutions for the products sold by Alcoa, the ability of large customers to exert leverage in the marketplace to affect the pricing for fabricated aluminum products, or other developments by or
affecting Alcoas competitors or customers could affect Alcoas results of operations. In addition, Alcoas competitive position depends, in part, on the companys access to an economical power supply to sustain its operations in
various countries.

Further metals industry consolidation could impact Alcoas business.

The metals industry has experienced consolidation over the past several years, and there may be further industry consolidation in the future. Although
current industry consolidation has not negatively impacted Alcoas business, further consolidation in the aluminum industry could possibly have negative impacts that we cannot reliably predict.

Currently, Alcoas long-term debt is rated BBB- with stable outlook by Standard and Poors Ratings Services; Baa3 with stable outlook by Moodys Investors Services; and BBB- with stable
outlook by Fitch Ratings. There can be no assurance that any rating assigned will remain in effect for any given period of time or that a rating will not be lowered, suspended or withdrawn entirely by a rating agency, if, in that rating
agencys judgment, circumstances so warrant. Maintaining an investment-grade credit rating is an important element of Alcoas financial strategy. A downgrade of Alcoas credit ratings could adversely affect the market price of its
securities, adversely affect existing financing, limit access to the capital or credit markets or otherwise adversely affect the availability of other new financing on favorable terms, if at all, result in more restrictive covenants in agreements
governing the terms of any future indebtedness that the company incurs, increase the cost of borrowing, or impair its business, financial condition and results of operations.

In addition, under the project financings for the joint venture project in the Kingdom of Saudi Arabia, a downgrade of Alcoas credit ratings below investment grade by at least two rating
agencies would require Alcoa to provide a letter of credit or fund an escrow account for a portion or all of Alcoas remaining equity commitment to the joint venture. For additional information regarding the project financings, see Note I to
the Consolidated Financial Statements in Part II, Item 8 (Financial Statements and Supplementary Data) of this report.

Alcoa could be
adversely affected by the failure of financial institutions to fulfill their commitments under committed credit facilities.

As discussed
in Part II, Item 7. (Managements Discussion and Analysis of Financial Condition and Results of Operations  Liquidity and Capital Resources) of this report, Alcoa has a committed revolving credit facility with financial
institutions available for its use, for which the company pays commitment fees. The facility is provided by a syndicate of several financial institutions, with each institution agreeing severally (and not jointly) to make revolving credit loans
to Alcoa in accordance with the terms of the credit agreement. If one or more of the financial institutions providing the committed credit facility were to default on its obligation to fund its commitment, the portion of the committed facility
provided by such defaulting financial institution would not be available to the company.

Alcoa may not be able to realize expected
benefits from the change to index pricing of alumina.

Alcoa has implemented a move to a pricing mechanism for alumina based on an index
of alumina prices rather than a percentage of the LME-based aluminum price. Alcoa believes that this change, expected to affect approximately 20% of annual contracts coming up for renewal each year, will more fairly reflect the fundamentals of
alumina including raw materials and other input costs involved. There can be no assurance that such index pricing ultimately will be accepted or that such index pricing will result in consistently greater profitability from sales of alumina.

Alcoas global operations are exposed to political and economic risks, commercial instability and events beyond its control in the
countries in which it operates.

Alcoa has operations or activities in numerous countries and regions outside the U.S. having varying
degrees of political and economic risk, including China, Europe, Guinea, Russia, and the Kingdom of Saudi Arabia, among others. Risks include those associated with sovereign and private debt default, political instability, civil unrest,
expropriation, nationalization, renegotiation or nullification of existing agreements, mining leases and permits, commercial instability caused by corruption, and changes in local government laws, regulations and policies, including those related to
tariffs and trade barriers, taxation, exchange controls, employment regulations and repatriation of earnings. While the impact of these factors is difficult to predict, any one or more of them could adversely affect Alcoas business, financial
condition or operating results.

Alcoa could be adversely affected by changes in the business or financial condition of a significant
customer or customers.

A significant downturn or further deterioration in the business or financial condition of a key customer or
customers supplied by Alcoa could affect Alcoas results of operations in a particular period. Alcoas customers may experience delays in the launch of new products, labor strikes, diminished liquidity or credit unavailability, weak demand
for their products, or other difficulties in their businesses. If Alcoa is not successful in replacing business lost from such customers, profitability may be adversely affected.

Alcoa may be exposed to significant legal proceedings, investigations or changes in U.S. federal, state or foreign law, regulation or policy.

Alcoas results of operations or liquidity in a particular period could be affected by new or increasingly stringent laws, regulatory requirements
or interpretations, or outcomes of significant legal proceedings or investigations adverse to Alcoa. The company may experience a change in effective tax rates or become subject to unexpected or rising costs

associated with business operations or provision of health or welfare benefits to employees due to changes in laws, regulations or policies. The company is also subject to a variety of legal
compliance risks. These risks include, among other things, potential claims relating to product liability, health and safety, environmental matters, intellectual property rights, government contracts, taxes, and compliance with U.S. and foreign
export laws, anti-bribery laws, competition laws and sales and trading practices. Alcoa could be subject to fines, penalties, damages (in certain cases, treble damages), or suspension or debarment from government contracts. While Alcoa believes it
has adopted appropriate risk management and compliance programs to address and reduce these risks, the global and diverse nature of its operations means that these risks will continue to exist and additional legal proceedings and contingencies may
arise from time to time. In addition, various factors or developments can lead the company to change current estimates of liabilities or make such estimates for matters previously not susceptible of reasonable estimates, such as a significant
judicial ruling or judgment, a significant settlement, significant regulatory developments or changes in applicable law. A future adverse ruling or settlement or unfavorable changes in laws, regulations or policies, or other contingencies that the
company cannot predict with certainty could have a material adverse effect on the companys results of operations or cash flows in a particular period. For additional information regarding the legal proceedings involving the company, see the
discussion in Part I, Item 3. (Legal Proceedings), of this report and in Note N to the Consolidated Financial Statements in Part II, Item 8. (Financial Statements and Supplementary Data).

Alcoa is subject to a broad range of health, safety and environmental laws and regulations in the jurisdictions in which it operates and may be
exposed to substantial costs and liabilities associated with such laws and regulations.

Alcoas operations worldwide are subject to
numerous complex and increasingly stringent health, safety and environmental laws and regulations. The costs of complying with such laws and regulations, including participation in assessments and cleanups of sites, as well as internal voluntary
programs, are significant and will continue to be so for the foreseeable future. Environmental matters for which we may be liable may arise in the future at our present sites, where no problem is currently known, at previously owned sites, sites
previously operated by us, sites owned by our predecessors or sites that we may acquire in the future. Alcoas results of operations or liquidity in a particular period could be affected by certain health, safety or environmental matters,
including remediation costs and damages related to several sites. Additionally, evolving regulatory standards and expectations can result in increased litigation and/or increased costs, all of which can have a material and adverse effect on earnings
and cash flows.

Energy is a significant input in a number of Alcoas operations. There is growing recognition that
consumption of energy derived from fossil fuels is a contributor to global warming.

A number of governments or governmental bodies have
introduced or are contemplating legislative and regulatory change in response to the potential impacts of climate change. There is also current and emerging regulation, such as the mandatory renewable energy target in Australia, Australias
carbon tax effective in 2012, Quebecs transition to a cap and trade system with compliance required in 2013 and European direct emission regulations expected by 2013. Alcoa will likely see changes in the margins of greenhouse
gas-intensive assets and energy-intensive assets as a result of regulatory impacts in the countries in which the company operates. These regulatory mechanisms may be either voluntary or legislated and may impact Alcoas operations directly or
indirectly through customers or Alcoas supply chain. Inconsistency of regulations may also change the attractiveness of the locations of some of the companys assets. Assessments of the potential impact of future climate change
legislation, regulation and international treaties and accords are uncertain, given the wide scope of potential regulatory change in countries in which Alcoa operates. The company may realize increased capital expenditures resulting from required
compliance with revised or new legislation or regulations, costs to purchase or profits from sales of, allowances or credits under a cap and trade system, increased insurance premiums and deductibles as new actuarial tables are developed
to reshape coverage, a change in competitive position relative to industry peers and changes to profit or loss arising from increased or decreased demand for goods produced by the company and indirectly, from changes in costs of goods sold.

The potential physical impacts of climate change on the companys operations are highly uncertain, and
will be particular to the geographic circumstances. These may include changes in rainfall patterns, shortages of water or other natural resources, changing sea levels, changing storm patterns and intensities, and changing temperature levels. These
effects may adversely impact the cost, production and financial performance of Alcoas operations.

Adverse changes in discount rates,
lower-than-expected investment return on pension assets and other factors could affect Alcoas results of operations or level of pension funding contributions in future periods.

Alcoas results of operations may be negatively affected by the amount of expense Alcoa records for its pension and other postretirement benefit plans. U.S. generally accepted accounting principles
(GAAP) require that Alcoa calculate income or expense for the plans using actuarial valuations. These valuations reflect assumptions about financial market and other economic conditions, which may change based on changes in key economic
indicators. The most significant year-end assumptions used by Alcoa to estimate pension or other postretirement benefit income or expense for the following year are the discount rate and the expected long-term rate of return on plan assets. The
large decline in our funded status in 2008 due to the financial crisis generated significant unrecognized actuarial losses. We anticipate that expense in future years will continue to be affected as the unrecognized losses are recognized in
earnings. In addition, Alcoa is required to make an annual measurement of plan assets and liabilities, which may result in a significant charge to shareholders equity. For a discussion regarding how Alcoas financial statements can
be affected by pension and other postretirement benefits accounting policies, see Part II, Item 7. (Managements Discussion and Analysis of Financial Condition and Results of Operations) under the caption Critical Accounting
Policies and EstimatesPension and Other Postretirement Benefits, and Part II, Item 8. (Financial Statements and Supplementary Data) under Note W to the Consolidated Financial StatementsPension and Other Postretirement Benefits.
Although GAAP expense and pension funding contributions are not directly related, the key economic factors that affect GAAP expense would also likely affect the amount of cash or securities Alcoa would contribute to the pension plans. Potential
pension contributions include both mandatory amounts required under federal law and discretionary contributions to improve the plans funded status. Higher than expected potential contributions due to a further decline in our funded status
either by an additional decline in discount rates or a lower than expected investment return on plan assets could adversely affect our cash flows.

A significant portion of Alcoas employees are represented by labor unions in a number of countries under various collective bargaining agreements with varying durations and expiration dates. While
Alcoa was successful in renegotiating the master collective bargaining agreement with the United Steelworkers in June 2010, Alcoa may not be able to satisfactorily renegotiate other collective bargaining agreements in the U.S. and other countries
when they expire. In addition, existing collective bargaining agreements may not prevent a strike or work stoppage at Alcoas facilities in the future. Alcoa may also be subject to general country strikes or work stoppages unrelated to its
business or collective bargaining agreements. Any such work stoppages (or potential work stoppages) could have a material adverse effect on Alcoas financial results.

Alcoas human resource talent pool may not be adequate to support the companys growth.

Alcoas existing operations and development projects require highly skilled executives, and staff with relevant industry and technical experience. The inability of the company and industry to attract
and retain such people may adversely impact Alcoas ability to adequately meet project demands and fill roles in existing operations. Skills shortages in engineering, technical service, construction and maintenance contractors and other labor
market inadequacies may also impact activities. These shortages may adversely impact the cost and schedule of development projects and the cost and efficiency of existing operations.

Alcoa may not realize expected long-term benefits from its productivity and cost-reduction initiatives.

Alcoa has undertaken, and may continue to undertake, productivity and cost-reduction initiatives to improve performance and conserve cash, including new procurement strategies for raw materials, such as
backward integration and non-traditional sourcing from numerous geographies, and deployment of company-wide business process models, such as the Alcoa Business System and the Alcoa Enterprise Business Solution (an initiative designed to build a

common global infrastructure across Alcoa for data, processes and supporting software). There is no assurance that these initiatives will all be completed or beneficial to Alcoa or that estimated
cost savings from such activities will be realized.

Alcoa may not be able to successfully develop and implement technology initiatives.

Alcoa is working on developments in advanced smelting process technologies, including inert anode and carbothermic technology, in
addition to multi-alloy casting processes. There can be no assurance that such technologies will be commercially feasible or beneficial to Alcoa.

Alcoas business and growth prospects may be negatively impacted by reductions in its capital expenditures.

Alcoa requires substantial capital to invest in greenfield and brownfield projects and to maintain and prolong the life and capacity of its existing facilities. For 2012, Alcoa has targeted generating
positive cash flow from operations that will exceed capital spending. Insufficient cash generation may negatively impact Alcoas ability to fund as planned its sustaining and growth capital projects. Over the long term, Alcoas ability to
take advantage of forecasted global demand growth for aluminum may be constrained by earlier capital expenditure restrictions, and the long-term value of its business could be adversely impacted. The companys position in relation to its
competitors may also deteriorate.

Alcoa may also need to address commercial and political issues in relation to its reductions in capital
expenditures in certain of the jurisdictions in which it operates. If Alcoas interest in its joint ventures is diluted or it loses key concessions, its growth could be constrained. Any of the foregoing could have a material adverse effect on
the companys business, results of operations, financial condition and prospects.

Unexpected events may increase Alcoas cost of
doing business or disrupt Alcoas operations.

Unexpected events, including fires or explosions at facilities, natural disasters, war
or terrorist activities, unplanned outages, supply disruptions, or failure of equipment or processes to meet specifications may increase the cost of doing business or otherwise impact Alcoas financial performance. Further, existing insurance
arrangements may not provide protection for all of the costs that may arise from such events.

The company has identified attempts to gain unauthorized access through
the Internet to our information systems. The purpose of these attempts appears to have been to establish command and control and then export company-sensitive data. To our knowledge, no such attack was ultimately successful. However, the success of
such attacks and the resulting damage may only be clear over time and after intensive analysis. Should such an attack succeed, the impact may be material to the company in terms of lost intellectual property, trade secrets, product development data,
and other business development data.

The above list of important factors is not all-inclusive or necessarily in order of importance.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Alcoas principal office is located at 390 Park Avenue, New York, New York 10022-4608. Alcoas corporate center is located at 201 Isabella
Street, Pittsburgh, Pennsylvania 15212-5858. The Alcoa Technical Center for research and development is located at 100 Technical Drive, Alcoa Center, Pennsylvania 15069.

Alcoa leases some of its facilities; however, it is the opinion of management that the leases do not
materially affect the continued use of the properties or the properties values.

Alcoa believes that its facilities are suitable and
adequate for its operations. Although no title examination of properties owned by Alcoa has been made for the purpose of this report, the company knows of no material defects in title to any such properties. See Notes A and H to the financial
statements for information on properties, plants and equipment.

Alcoa has active plants and holdings under the following segments and in the
following geographic areas:

ALUMINA

Bauxite: See the table and related text in the Bauxite Interests section on pages 5-6 of this report.

Alumina: See the table and related text in the Alumina Refining Facilities and Capacity section on pages 7-8 of
this report.

PRIMARY METALS

See the table and related text in the Primary Aluminum Facilities and Capacity section on pages 9-11 of this report.

FLAT-ROLLED PRODUCTS

See the table and related
text in the Flat-Rolled Products Facilities section on pages 11-12 of this report.

ENGINEERED PRODUCTS
AND SOLUTIONS

See the table and related text in the Engineered Products and Solutions Facilities section on pages
12-14 of this report.

CORPORATE

See the table and related text in the Corporate Facilities section on page 15 of this report.

Item 3. Legal Proceedings.

In the ordinary
course of its business, Alcoa is involved in a number of lawsuits and claims, both actual and potential.

Litigation

As previously reported, along with various asbestos manufacturers and distributors, Alcoa and its subsidiaries as premises owners are defendants in
several hundred active lawsuits filed on behalf of persons alleging injury predominantly as a result of occupational exposure to asbestos at various company facilities. In addition, an Alcoa subsidiary company has been named, along with a large
common group of industrial companies, in a pattern complaint where the companys involvement is not evident. Since 1999, several thousand such complaints have been filed. To date, the subsidiary has been dismissed from almost every case that
was actually placed in line for trial. Alcoa, its subsidiaries and acquired companies, all have had numerous insurance policies over the years that provide coverage for asbestos based claims. Many of these policies provide layers of coverage for
varying periods of time and for varying locations. Alcoa has significant insurance coverage and believes that its reserves are adequate for its known asbestos exposure related liabilities. The costs of defense and settlement have not been and are
not expected to be material to the results of operations, cash flows, and financial position of the company.

As previously reported, in November 2006, in Curtis v. Alcoa Inc., Civil Action No. 3:06cv448 (E.D.
Tenn.), a class action was filed by plaintiffs representing approximately 13,000 retired former employees of Alcoa or Reynolds Metals Company and spouses and dependants of such retirees alleging violation of the Employee Retirement Income Security
Act (ERISA) and the Labor-Management Relations Act by requiring plaintiffs, beginning January 1, 2007, to pay health insurance premiums and increased co-payments and co-insurance for certain medical procedures and prescription drugs. Plaintiffs
alleged these changes to their retiree health care plans violated their rights to vested health care benefits. Plaintiffs additionally alleged that Alcoa had breached its fiduciary duty to plaintiffs under ERISA by misrepresenting to them that their
health benefits would never change. Plaintiffs sought injunctive and declaratory relief, back payment of benefits, and attorneys fees. Alcoa had consented to treatment of plaintiffs claims as a class action. During the fourth quarter of
2007, following briefing and argument, the court ordered consolidation of the plaintiffs motion for preliminary injunction with trial, certified a plaintiff class, bifurcated and stayed the plaintiffs breach of fiduciary duty claims,
struck the plaintiffs jury demand, but indicated it would use an advisory jury, and set a trial date of September 17, 2008. In August 2008, the court set a new trial date of March 24, 2009 and, subsequently, the trial date was moved
to September 22, 2009. In June 2009, the court indicated that it would not use an advisory jury at trial. Trial in the matter was held over eight days commencing September 22, 2009 and ending on October 1, 2009 in federal court in
Knoxville, TN before the Honorable Thomas Phillips, U.S. District Court Judge. At the conclusion of evidence, the court set a post-hearing briefing schedule for submission of proposed findings of fact and conclusions of law by the parties and for
replies to the same. Post trial briefing was submitted on December 4, 2009. On March 9, 2011, the court issued a judgment order dismissing plaintiffs lawsuit in its entirety with prejudice for the reasons stated in its Findings of
Fact and Conclusions of Law. On March 23, 2011, plaintiffs filed a motion for clarification and/or amendment of the judgment order, which seeks, among other things, a declaration that plaintiffs retiree benefits are vested subject to an
annual cap and an injunction preventing Alcoa, prior to 2017, from modifying the plan design to which plaintiffs are subject or changing the premiums and deductibles that plaintiffs must pay. Also on March 23, 2011, plaintiffs filed a motion
for award of attorneys fees and expenses. Alcoa filed its opposition to both motions on April 11, 2011. The time for plaintiffs to appeal from the courts March 9, 2011 judgment will not begin until the court disposes of these
motions.

As previously reported, on February 27, 2008, Alcoa Inc. received notice that Aluminium Bahrain B.S.C. (Alba) had filed suit
against Alcoa Inc. and Alcoa World Alumina LLC (collectively, Alcoa), and others, in the U.S. District Court for the Western District of Pennsylvania (the Court), Civil Action number 08-299, styled Aluminium Bahrain B.S.C. v.
Alcoa Inc., Alcoa World Alumina LLC, William Rice, and Victor Phillip Dahdaleh. The complaint alleges that certain Alcoa entities and their agents, including Victor Phillip Dahdaleh, have engaged in a conspiracy over a period of 15 years to defraud
Alba. The complaint further alleges that Alcoa and its employees or agents (1) illegally bribed officials of the government of Bahrain and (or) officers of Alba in order to force Alba to purchase alumina at excessively high prices,
(2) illegally bribed officials of the government of Bahrain and (or) officers of Alba and issued threats in order to pressure Alba to enter into an agreement by which Alcoa would purchase an equity interest in Alba, and (3) assigned
portions of existing supply contracts between Alcoa and Alba for the sole purpose of facilitating alleged bribes and unlawful commissions. The complaint alleges that Alcoa and the other defendants violated the Racketeer Influenced and Corrupt
Organizations Act (RICO) and committed fraud. Albas complaint seeks compensatory, consequential, exemplary, and punitive damages, rescission of the 2005 alumina supply contract, and attorneys fees and costs. Alba seeks treble damages
with respect to its RICO claims.

On February 26, 2008, Alcoa Inc. had advised the U.S. Department of Justice (DOJ) and the Securities
and Exchange Commission (SEC) that it had recently become aware of these claims, had already begun an internal investigation, and intended to cooperate fully in any investigation that the DOJ or the SEC may commence. On March 17, 2008, the DOJ
notified Alcoa that it had opened a formal investigation and Alcoa has been cooperating with the government.

In response to a motion filed by
the DOJ on March 27, 2008, the Court ordered the suit filed by Alba to be administratively closed and that all discovery be stayed to allow the DOJ to fully conduct an investigation without the interference and distraction of ongoing civil
litigation. The Court further ordered that the case will be reopened at the close of the DOJs investigation. On November 8, 2011, at Alcoas request, the Court removed the case from administrative stay and ordered Alba to file an
Amended Complaint by November 28, 2011 and a RICO case statement

30 days thereafter for the limited purpose of allowing Alcoa to move to dismiss Albas lawsuit. Pursuant to the November 8, 2011 order, briefing on the motion to dismiss is to be
completed by March 2012. Separately, the DOJs and SECs investigations are ongoing. While Alcoa has been engaged in dialogue with both the DOJ and SEC, it is unable to reasonably predict an outcome or to estimate a range of reasonably
possible loss with regard to any of the governmental or private party matters discussed above, but such losses may be material in a particular period to Alcoas results of operations.

As previously reported, on July 21, 2008, the Teamsters Local #500 Severance Fund and the Southeastern Pennsylvania Transportation Authority filed a shareholder derivative suit in the civil division
of the Court of Common Pleas of Allegheny County, Pennsylvania against certain officers and directors of Alcoa claiming breach of fiduciary duty, gross mismanagement, and other violations. This derivative action stems from the civil litigation
brought by Alba against Alcoa, AWA, Victor Phillip Dahdaleh, and others, and the subsequent investigation of Alcoa by the DOJ and the SEC with respect to Albas claims. This derivative action claims that the defendants caused or failed to
prevent the matters alleged in the Alba lawsuit. The director defendants filed a motion to dismiss on November 21, 2008. On September 3, 2009, a hearing was held on Alcoas motion and, on October 12, 2009, the court issued its
order denying Alcoas motion to dismiss but finding that a derivative action during the conduct of the DOJ investigation and pendency of the underlying complaint by Alba would be contrary to the interest of shareholders and, therefore, stayed
the case until further order of the court. This derivative action is in its preliminary stages and the company is unable to reasonably predict an outcome or to estimate a range of reasonably possible loss.

As previously reported, on March 6, 2009, the Philadelphia Gas Works Retirement Fund filed a shareholder derivative suit in the civil division of
the Court of Common Pleas of Philadelphia County, Pennsylvania. This action was brought against certain officers and directors of Alcoa claiming breach of fiduciary duty and other violations and is based on the allegations made in the previously
disclosed civil litigation brought by Alba against Alcoa, AWA, Victor Phillip Dahdaleh, and others, and the subsequent investigation of Alcoa by the DOJ and the SEC with respect to Albas claims. This derivative action claims that the
defendants caused or failed to prevent the conduct alleged in the Alba lawsuit. On August 7, 2009, the director and officer defendants filed an unopposed motion to coordinate the case with the Teamsters Local #500 suit, described immediately
above, in the Allegheny County Common Pleas Court. The Allegheny County court issued its order consolidating the case on September 18, 2009. Thereafter, on October 31, 2009, the court assigned this action to the Commerce and Complex
Litigation division of the Allegheny Court of Common Pleas and on November 20, 2009, the court granted defendants motion to stay all proceedings in the Philadelphia Gas action until the earlier of the court lifting the stay in the
Teamsters derivative action or further order of the court in this action. This derivative action is in its preliminary stages and the company is unable to reasonably predict an outcome or to estimate a range of reasonably possible loss.

Before 2002, Alcoa purchased power in Italy in the regulated energy market and received a drawback of a portion of the price of power under a special
tariff in an amount calculated in accordance with a published resolution of the Italian Energy Authority, Energy Authority Resolution n. 204/1999. In 2001, the Energy Authority published another resolution, which clarified that the drawback would be
calculated in the same manner, and in the same amount, in either the regulated or unregulated market. At the beginning of 2002, Alcoa left the regulated energy market to purchase energy in the unregulated market. Subsequently, in 2004, the Energy
Authority introduced regulation no. 148/2004 which set forth a different method for calculating the special tariff that would result in a different drawback for the regulated and unregulated markets. Alcoa challenged the new regulation in the
Administrative Court of Milan and received a favorable judgment in 2006. Following this ruling, Alcoa continued to receive the power price drawback in accordance with the original calculation method, through 2009, when the European Commission
declared all such special tariffs to be impermissible state aid. In 2010 the Energy Authority appealed the 2006 ruling to the Consiglio di Stato (final court of appeal). On December 2, 2011, the Consiglio di Stato ruled in favor of
the Energy Authority and against Alcoa, thus presenting the opportunity for the energy regulators to seek reimbursement from Alcoa of an amount equal to the difference between the actual drawback amounts received over the relevant time period, and
the drawback as it would have been calculated in accordance with regulation 148/2004. Any such reimbursement would have to be made by way of a separate claim to Alcoa from the energy authorities and, thus far, no such claim has been presented. At
this time, the company is unable to reasonably predict an outcome for this matter.

As previously reported, in July 2006, the European Commission (EC) announced that it had opened an investigation to establish whether an extension of the regulated electricity tariff granted by Italy to
some energy-intensive industries complies with European Union (EU) state aid rules. The Italian power tariff extended the tariff that was in force until December 31, 2005 through November 19, 2009 (Alcoa has been incurring higher power
costs at its smelters in Italy subsequent to the tariff end date). The extension was originally through 2010, but the date was changed by legislation adopted by the Italian Parliament effective on August 15, 2009. Prior to expiration of the
tariff in 2005, Alcoa had been operating in Italy for more than 10 years under a power supply structure approved by the EC in 1996. That measure provided a competitive power supply to the primary aluminum industry and was not considered state aid
from the Italian Government. The ECs announcement expressed concerns about whether Italys extension of the tariff beyond 2005 was compatible with EU legislation and potentially distorted competition in the European market of primary
aluminum, where energy is an important part of the production costs.

On November 19, 2009, the EC announced a decision in this matter
stating that the extension of the tariff by Italy constituted unlawful state aid, in part, and, therefore, the Italian Government is to recover a portion of the benefit Alcoa received since January 2006 (including interest). The amount of this
recovery will be based on a calculation that is being prepared by the Italian Government. Pending formal notification from the Italian Government, Alcoa estimates that a payment in the range of $300 to $500 million will be required (the timing of
such payment is uncertain). In late 2009, after discussions with legal counsel and reviewing the bases on which the EC decided, including the different considerations cited in the EC decision regarding Alcoas two smelters in Italy, Alcoa
recorded a charge of $250 million, including $20 million to write off a receivable from the Italian Government for amounts due under the now expired tariff structure. On April 19, 2010, Alcoa filed an appeal of this decision with the General
Court of the EU. Alcoa will pursue all substantive and procedural legal steps available to annul the ECs decision. On May 22, 2010, Alcoa also filed with the General Court a request for injunctive relief to suspend the effectiveness of
the decision, but, on July 12, 2010, the General Court denied such request. On September 10, 2010, Alcoa appealed the July 12, 2010 decision to the European Court of Justice (ECJ); this appeal was dismissed on December 16, 2011.

On March 23, 2011, the EC announced that it has decided to refer the Italian Government to the ECJ for failure to comply with the
ECs November 19, 2009 decision.

Separately, on November 29, 2006, Alcoa filed an appeal before the General Court (formerly
the European Court of First Instance) seeking the annulment of the ECs decision to open an investigation alleging that such decision did not follow the applicable procedural rules. On March 25, 2009, the General Court denied Alcoas
appeal. On May 29, 2009, Alcoa appealed the March 25, 2009 ruling before the ECJ. The hearing of the May 29, 2009 appeal was held on June 24, 2010. On July 21, 2011, the ECJ denied Alcoas appeal.

As previously reported, in January 2007, the EC announced that it had opened an investigation to establish whether the regulated electricity tariffs
granted by Spain comply with EU state aid rules. At the time the EC opened its investigation, Alcoa had been operating in Spain for more than nine years under a power supply structure approved by the Spanish Government in 1986, an equivalent tariff
having been granted in 1983. The investigation is limited to the year 2005 and is focused both on the energy-intensive consumers and the distribution companies. The investigation provided 30 days to any interested party to submit observations and
comments to the EC. With respect to the energy-intensive consumers, the EC opened the investigation on the assumption that prices paid under the tariff in 2005 were lower than a pool price mechanism, therefore being, in principle, artificially below
market conditions. Alcoa submitted comments in which the company provided evidence that prices paid by energy-intensive consumers were in line with the market, in addition to various legal arguments defending the legality of the Spanish tariff
system. It is Alcoas understanding that the Spanish tariff system for electricity is in conformity with all applicable laws and regulations, and therefore no state aid is present in the tariff system. While Alcoa does not believe that an
unfavorable decision is probable, management has estimated that the total potential impact from an unfavorable decision could be approximately $90 million (70 million) pretax. Also, while Alcoa believes that any additional cost would only be

assessed for the year 2005, it is possible that the EC could extend its investigation to later years. If the ECs investigation concludes that the regulated electricity tariffs for
industries are unlawful, Alcoa will have an opportunity to challenge the decision in the EU courts.

Environmental Matters

Alcoa is involved in proceedings under the Comprehensive Environmental Response, Compensation and Liability Act, also known as Superfund
(CERCLA) or analogous state provisions regarding the usage, disposal, storage or treatment of hazardous substances at a number of sites in the U.S. The company has committed to participate, or is engaged in negotiations with federal or state
authorities relative to its alleged liability for participation, in clean-up efforts at several such sites. The most significant of these matters, including the remediation of the Grasse River in Massena, NY, are discussed in the Environmental
Matters section of Note N to the Consolidated Financial Statements under the caption Environmental Matters on pages 114-117.

As
previously reported, representatives of various U.S. federal and state agencies and a Native American tribe, acting in their capacities as trustees for natural resources (Trustees), have asserted that Alcoa and Reynolds Metals Company (Reynolds) may
be liable for loss or damage to such resources under federal and state law based on Alcoas and Reynolds operations at their Massena, New York and St. Lawrence, New York facilities. While formal proceedings have not been instituted, the
company has continued to actively investigate these claims. Pursuant to an agreement entered into with the Trustees in 1991, Alcoa and Reynolds had been working cooperatively with General Motors Corporation, which is facing similar claims by the
Trustees, to assess potential injuries to natural resources in the region. With the bankruptcy of General Motors in 2009, Motors Liquidation Company (MLC) took over General Motors liability in this matter. In September 2009, MLC
notified Alcoa and the Trustees that it would no longer participate in the cooperative process. Alcoa and the Trustees agreed to continue to work together cooperatively without MLC to resolve Alcoas and Reynolds natural resources
damages liability in this matter. In January 2011, the Trustees, representing the United States, the State of New York and the Mohawk tribe, and Alcoa reached an agreement in principle to resolve the natural resource damage claims. The
agreement is subject to final approval of the respective parties and will be subject to a federal court approved consent decree, including public notice and comment. Any upward adjustment in the remediation reserve would be taken in connection with
the finalization of the settlement agreement.

As previously reported, in August 2005, Dany Lavoie, a resident of Baie Comeau in the Canadian
Province of Québec, filed a Motion for Authorization to Institute a Class Action and for Designation of a Class Representative against Alcoa Canada Inc., Alcoa Limitée, Societe Canadienne de Metaux Reynolds Limitée and Canadian
British Aluminum in the Superior Court of Québec in the District of Baie Comeau. Plaintiff seeks to institute the class action on behalf of a putative class consisting of all past, present and future owners, tenants and residents of Baie
Comeaus St. Georges neighborhood. He alleges that defendants, as the present and past owners and operators of an aluminum smelter in Baie Comeau, have negligently allowed the emission of certain contaminants from the smelter, specifically
Polycyclic Aromatic Hydrocarbons or PAHs, that have been deposited on the lands and houses of the St. Georges neighborhood and its environs causing damage to the property of the putative class and causing health concerns for those who
inhabit that neighborhood. Plaintiff originally moved to certify a class action, sought to compel additional remediation to be conducted by the defendants beyond that already undertaken by them voluntarily, sought an injunction against further
emissions in excess of a limit to be determined by the court in consultation with an independent expert, and sought money damages on behalf of all class members. In May 2007, the court authorized a class action suit to include only people who
suffered property damage or personal injury damages caused by the emission of PAHs from the smelter. In September 2007, the plaintiff filed his claim against the original defendants, which the court had authorized in May. Alcoa has filed its
Statement of Defense and plaintiff has filed an Answer to that Statement. Alcoa also filed a Motion for Particulars with respect to certain paragraphs of plaintiffs Answer and a Motion to Strike with respect to certain paragraphs of
plaintiffs Answer. In late 2010, the Court denied these motions. At this stage of the proceeding, the company is unable to reasonably predict an outcome or to estimate a range of reasonably possible loss.

As previously reported, in January 2006, in Musgrave v. Alcoa, et al, Warrick Circuit Court, County of Warrick, Indiana; 87-C01-0601-CT-0006, Alcoa Inc.
and a subsidiary were sued by an individual, on behalf of himself and all

persons similarly situated, claiming harm from alleged exposure to waste that had been disposed in designated pits at the Squaw Creek Mine in the 1970s. During February 2007, class allegations
were dropped and the matter now proceeds as an individual claim. Alcoa filed a renewed motion to dismiss (arguing that the claims are barred by the Indiana Workers Compensation Act), amended its answer to include Indianas Recreational
Use Statute as an affirmative defense and filed a motion for summary judgment based on the Recreational Use Statute. The court granted Alcoas motion to dismiss regarding plaintiffs occupationally-related claims and denied the motion
regarding plaintiffs recreationally-related claims. On January 17, 2012, the court denied all outstanding motions with no opinion issued. The trial date for this matter has been scheduled for 2012. There is some limited discovery ongoing
in this matter. The company is unable to reasonably predict an outcome or to estimate a range of reasonably possible loss.

Also as previously
reported, in October 2006, in Barnett, et al. v. Alcoa and Alcoa Fuels, Inc., Warrick Circuit Court, County of Warrick, Indiana; 87-C01-0601-PL-499, forty-one plaintiffs sued Alcoa Inc. and a subsidiary, asserting claims similar to the Musgrave
matter, discussed above. In November 2007, Alcoa Inc. and its subsidiary filed motions to dismiss both the Musgrave and Barnett cases. In October 2008, the Warrick County Circuit Court granted Alcoas motions to dismiss, dismissing all
claims arising out of alleged occupational exposure to wastes at the Squaw Creek Mine, but in November 2008, the trial court clarified its ruling, indicating that the order does not dispose of plaintiffs personal injury claims based upon
alleged recreational or non-occupational exposure. Plaintiffs also filed a second amended complaint in response to the courts orders granting Alcoas motions to dismiss. On July 7, 2010, the court granted the
parties joint motions for a general continuance of trial settings. Discovery in this matter is stayed pending the outcome of the Musgrave matter. The company is unable to reasonably predict an outcome or to estimate a range of reasonably
possible loss.

As previously reported, in 1996, Alcoa acquired the Fusina, Italy smelter and rolling operations and the Portovesme, Italy
smelter (both of which are owned by Alcoas subsidiary, Alcoa Trasformazioni S.r.l.) from Alumix, an entity owned by the Italian Government. Alcoa also acquired the extrusion plants located in Feltre and Bolzano, Italy. At the time of the
acquisition, Alumix indemnified Alcoa for pre-existing environmental contamination at the sites. In 2004, the Italian Ministry of Environment (MOE) issued orders to Alcoa Trasformazioni S.r.l. and Alumix for the development of a clean-up plan
related to soil contamination in excess of allowable limits under legislative decree and to institute emergency actions and pay natural resource damages. On April 5, 2006, Alcoa Trasformazioni S.r.l.s Fusina site was also sued by the MOE
and Minister of Public Works (MOPW) in the Civil Court of Venice for an alleged liability for environmental damages, in parallel with the orders already issued by the MOE. Alcoa Trasformazioni S.r.l. appealed the orders, defended the civil case for
environmental damages (which is still pending) and filed suit against Alumix, as discussed below. Similar issues also existed with respect to the Bolzano and Feltre plants, based on orders issued by local authorities in 2006. All the orders have
been challenged in front of the Administrative Regional Courts, and all trials are still pending. However, in Bolzano the Municipality of Bolzano withdrew the order, and the Regional Administrative Tribunal of Veneto suspended the order in Feltre.
Most, if not all, of the underlying activities occurred during the ownership of Alumix, the governmental entity that sold the Italian plants to Alcoa.

As noted above, in response to the 2006 civil suit by the MOE and MOPW, Alcoa Trasformazioni S.r.l. filed suit against Alumix claiming indemnification under the original acquisition agreement, but brought
that suit in the Court of Rome due to jurisdictional rules. The Court of Rome has appointed an expert to assess the causes of the pollution. In June 2008, the parties (Alcoa and now Ligestra S.r.l. (Ligestra), the successor to Alumix) signed a
preliminary agreement by which they have committed to pursue a settlement and asked for a suspension of the technical assessment during the negotiations. The Court of Rome accepted the request, and postponed the technical assessment, reserving
its ability to fix the deadline depending on the development of negotiations. Alcoa and Ligestra agreed to a settlement in December 2008 with respect to the Feltre site. Ligestra paid the sum of 1.08 million Euros and Alcoa committed to
clean up the site. Further postponements were granted by the Court of Rome, and the next hearing was fixed for November 2011. The trial was then suspended under the joint request of the parties, and will have to be restarted in 2012. In the
meantime, in December 2009, Alcoa Trasformazioni S.r.l. and Ligestra reached an initial agreement for settlement of the liabilities related to Fusina. The settlement would also allow Alcoa to settle the 2006 civil suit by the MOE and MOPW for the
environmental damages pending before the Civil Court of Venice. The agreement outlines an

allocation of payments to the MOE for emergency action and natural resource damages and the scope and costs for a proposed soil remediation. In February 2011, a further and more detailed
settlement relating to Fusina was reached, allocating 80% and 20% of the remediation costs to Ligestra and Alcoa, respectively. Later in 2011, Alcoa and Ligestra signed a similar agreement relating to the Portovesme site. The agreements are
contingent upon final acceptance of the remediation project by the MOE. To provide time for settlement with Ligestra, the Minister of Environment and Alcoa jointly requested and the Civil Court of Venice has granted a series of postponements of
hearings in the Venice trial, assuming that the case will be closed. The company is unable to reasonably predict an outcome or to estimate a range of reasonably possible loss.

As previously reported, on November 30, 2010, Alcoa Alumínio S.A. (Alumínio) received service of a lawsuit that had been filed by the public prosecutors of the State of Pará in
Brazil in November 2009. The suit names the company and the State of Pará, which, through its Environmental Agency, had issued the operating license for the companys new bauxite mine in Juruti.The suit concerns the impact
of the project on the regions water system and alleges that certain conditions of the original installation license were not met by the company. In the lawsuit, plaintiffs requested a preliminary injunction suspending the operating license and
ordering payment of compensation. On April 14, 2010, the court denied plaintiffs request. Alumínio presented its defense in March 2011, on grounds that it was in compliance with the terms and conditions of its operating license,
which included plans to mitigate the impact of the project on the regions water system. In April, 2011, the State of Pará defended itself in the case asserting that the operating license contains the necessary plans to mitigate such
impact, that the State monitors the performance of Aluminios obligations arising out of such license, that the licensing process is valid and legal, and that the suit is meritless. This proceeding is in its preliminary stage and the company is
unable to reasonably predict an outcome or to estimate a range of reasonably possible loss.

As previously reported, by an amended complaint
filed April 21, 2005, Alcoa Global Fasteners, Inc. was added as a defendant in Orange County Water District (the Plaintiff) v. Northrop Corporation, et al., civil action 04cc00715 (Superior Court of California, County of Orange).
Plaintiff alleges contamination or threatened contamination of a drinking water aquifer by Alcoa, certain of the entities that preceded Alcoa at the same locations as property owners and/or operators, and other current and former industrial and
manufacturing businesses that operated in Orange County in past decades. Currently thirteen original defendants remain in the case. Plaintiff seeks to recover the cost of aquifer remediation and attorneys fees. This matter was stayed as to all
parties during the initial period of a bankruptcy case by a co-defendant; the stay has now been lifted as to Alcoa and all other defendants except the bankrupt co-defendant. Trial for the remaining original defendants began and was adjourned on
February 10, 2012, to allow plaintiff to complete expert discovery without breaching a five-year mandatory dismissal statute. The trial is scheduled to reconvene on or about March 26, 2012. Third party complaints against cross-defendants are
stayed until a future phase of trial at a yet-to-be-determined date. Plaintiff has asserted a total remedy cost of $150 million plus attorneys fees. Defendants do not believe such costs are consistent with appropriate remediation standards.
Alcoa contends that its liability, if any could be established, is minimal. A similar matter, Orange County Water District v. Sabic, et al, civil action 30-2008-00078246 (Superior Court of California, County of Orange) was filed against Alcoa Global
Fasteners, Inc. on June 23, 2008. This matter also alleges contamination or threatened contamination of a drinking water aquifer by Alcoa and others. While a trial has been set for 2013, plaintiff has not yet disclosed its estimate of
remediation costs. Alcoa believes that it is not responsible for any contamination as alleged in the complaint or that if any liability were to be established, its liability would be insignificant. At this time, Alcoa is unable to reasonably predict
an outcome or to estimate a range of reasonably possible loss for either matter.

St. Croix Proceedings

Josephat Henry. As previously reported, in September 1998, Hurricane Georges struck the U.S. Virgin Islands, including the St. Croix
Alumina, L.L.C. (SCA) facility on the island of St. Croix. The wind and rain associated with the hurricane caused material at the location to be blown into neighboring residential areas. SCA undertook or arranged various cleanup and remediation
efforts. The Division of Environmental Protection (DEP) of the Department of Planning and Natural Resources (DPNR) of the Virgin Islands Government issued a Notice of Violation that Alcoa has contested. In February 1999, certain residents of St.
Croix commenced a civil suit in the Territorial Court of the Virgin

Islands seeking compensatory and punitive damages and injunctive relief for alleged personal injuries and property damages associated with bauxite or red dust from the SCA facility.
The suit, which has been removed to the District Court of the Virgin Islands (the Court), names SCA, Alcoa and Glencore Ltd. as defendants, and, in August 2000, was accorded class action treatment. The class was defined to include
persons in various defined neighborhoods who suffered damages and/or injuries as a result of exposure during and after Hurricane Georges to red dust and red mud blown during Hurricane Georges. All of the defendants have denied liability,
and discovery and other pretrial proceedings have been underway since 1999. Plaintiffs expert reports claim that the material blown during Hurricane Georges consisted of bauxite and red mud, and contained crystalline silica, chromium, and
other substances. The reports further claim, among other things, that the population of the six subject neighborhoods as of the 2000 census (a total of 3,730 people) has been exposed to toxic substances through the fault of the defendants, and hence
will be able to show entitlement to lifetime medical monitoring as well as other compensatory and punitive relief. These opinions have been contested by the defendants expert reports, that state, among other things, that plaintiffs were not
exposed to the substances alleged and that in any event the level of alleged exposure does not justify lifetime medical monitoring. Alcoa and SCA turned over this matter to their insurance carriers who have been providing a defense. Glencore Ltd. is
jointly defending the case with Alcoa and SCA and has a pending motion to dismiss. In June 2008, the Court granted defendants joint motion to decertify the original class of plaintiffs, and certified a new class as to the claim of ongoing
nuisance, insofar as plaintiffs seek cleanup, abatement, or removal of the red mud currently present at the facility. (The named plaintiffs had previously dropped their claims for medical monitoring as a consequence of the courts rejection of
plaintiffs proffered expert opinion testimony). The Court expressly denied certification of a class as to any claims for remediation or cleanup of any area outside the facility (including plaintiffs property). The new class could seek
only injunctive relief rather than monetary damages. Named plaintiffs, however, could continue to prosecute their claims for personal injury, property damage, and punitive damages. In August 2009, in response to defendants motions, the
Court dismissed the named plaintiffs claims for personal injury and punitive damages, and denied the motion with respect to their property damage claims. In September 2009, the Court granted defendants motion for summary judgment on
the class plaintiffs claim for injunctive relief. In October 2009, plaintiffs appealed the Courts summary judgment order dismissing the claim for injunctive relief and in March 2011, the U.S. Court of Appeals for the Third Circuit
dismissed plaintiffs appeal of that order. In September 2011, the parties reached an oral agreement to settle the remaining claims in the case which would resolve the personal property damage claims of the 12 remaining individual plaintiffs.
Plaintiffs have indicated that they nevertheless intend to appeal all of the claim dismissals that have occurred in the trial court over the life of the case. The company anticipates that this appeal will be filed within 60 days following entry of
such settlement. Alcoas share of the settlement is fully insured.

Contract Action. As previously reported, on
April 23, 2004, St. Croix Renaissance Group, L.L.L.P. (SCRG), Brownfield Recovery Corp., and Energy Answers Corporation of Puerto Rico (collectively referred to as Plaintiffs) filed a suit against St. Croix Alumina L.L.C. and Alcoa
World Alumina, LLC (collectively referred to as Alcoa) in the Territorial Court of the Virgin Islands, Division of St. Croix for claims related to the sale of Alcoas former St. Croix alumina refinery to Plaintiffs. Alcoa thereafter
removed the case to federal court and after a several year period of discovery and motion practice, a jury trial on the matter took place in St. Croix from January 11, 2011 to January 20, 2011. The jury returned a verdict in favor of
Plaintiffs and the Court awarded damages as described: on a claim of breaches of warranty, the jury awarded $13 million; on the same claim, the jury awarded punitive damages in the amount of $6 million; and on a negligence claim for property damage,
the jury awarded $10 million. Plaintiffs filed a motion seeking pre-judgment interest on the jury award. In February 2011, Alcoa filed post-trial motions seeking judgment notwithstanding the verdict or, in the alternative, a new trial. In May 2011,
the court granted Alcoas motion for judgment regarding Plaintiffs $10 million negligence award and denied the remainder of Alcoas motions. Additionally, the court awarded Plaintiffs pre-judgment interest of $2 million on the breach
of warranty award. As a result of the courts post-trial decisions, Alcoa recorded a charge of $20 million in 2011. In June 2011, Alcoa filed a notice of appeal with the U.S. Court of Appeals for the Third Circuit regarding Alcoas denied
post-trial motions. Also on June 22, 2011, SCRG filed a notice of cross appeal with the Third Circuit Court related to certain pre-trial decisions of the court and of the courts post-trial ruling on the negligence claim. The Third Circuit
has referred this matter to mediation as is its standard practice in appeals.

NRD Action. As previously reported, in May 2005, AWA and SCA were among the defendants
listed in a lawsuit brought by the Commissioner of the DPNR, Dean Plaskett, in his capacity as Trustee for Natural Resources of the Territory of the United States Virgin Islands in the District Court of the Virgin Islands, Division of St. Croix. The
complaint seeks damages for alleged injuries to natural resources caused by alleged releases from an alumina refinery facility in St. Croix that was owned by SCA from 1995 to 2002. Also listed in the lawsuit are previous and subsequent owners of the
alumina refinery and the owners of an adjacent oil refinery. Claims are brought under CERCLA, U.S. Virgin Islands law, and common law. The plaintiff has not specified in the complaint the amount it seeks in damages. The defendants filed motions to
dismiss in 2005. In October 2007, in an effort to resolve the liability of SCRG in the lawsuit, as well as any other CERCLA liability SCRG may have with respect to the facility, DPNR filed a new lawsuit against SCRG seeking the recovery of response
costs under CERCLA, and the plaintiff and SCRG filed a joint Agreement and Consent Decree. The remaining defendants each filed objections to the Agreement and Consent Decree, and in October 2008, the court denied entry of the Agreement and
Consent Decree. The court also ruled on the motions to dismiss that were filed by all defendants in 2005. The court dismissed two counts from the complaint (common law trespass and V.I. Water Pollution Control Act), but denied the motions with
regard to the other six counts (CERCLA, V.I. Oil Spill Prevention and Pollution Control Act, and common law strict liability, negligence, negligence per se and nuisance). The court also ruled that the Virgin Islands Government was the proper
plaintiff for the territorial law claims and required re-filing of the complaint by the proper parties, which was done in November 2008. The plaintiffs subsequently moved to amend their complaint further, were granted leave by the court to do
so, and filed an amended complaint on July 30, 2009. AWA and SCA filed an answer, counterclaim and cross-claim against SCRG in response to the amended complaint in August 2009. In response to the plaintiffs amended complaint, the
other former owners of the alumina refinery filed answers, counterclaims, and cross-claims against SCRG and certain agencies of the Virgin Islands Government. During July 2009, each defendant except SCRG filed a partial motion for summary judgment
seeking dismissal of the CERCLA cause of action on statute of limitations grounds. In July 2010, the court granted in part and denied in part each defendants motion for summary judgment. The court granted each defendants motion as to
alleged injury to off-site groundwater and downstream surface water resources but denied each motion as to alleged injury to on-site groundwater resources.

SCA-Only Territorial Action. As previously reported, in December 2006, SCA was sued by the Commissioner of DPNR, U.S. Virgin Islands, in the Superior Court of the Virgin Islands,
Division of St. Croix. The plaintiff alleges violations of the Coastal Zone Management Act and a construction permit issued thereunder. The complaint seeks a civil fine of $10,000 under the Coastal Zone Management Act, civil penalties of $10,000 per
day for alleged intentional and knowing violations of the Coastal Zone Management Act, exemplary damages, costs, interest and attorneys fees, and other such amounts as may be just and proper. SCA responded to the complaint on
February 2, 2007 by filing an answer and motion to disqualify DPNRs private attorney. The court has not yet ruled on the motion.

Multi-Party Enforcement Action. As previously reported, in December 2006, SCA, along with unaffiliated prior and subsequent owners, were
sued by the Commissioner of the DPNR, U.S. Virgin Islands, in the Superior Court of the Virgin Islands, Division of St. Croix. This second suit alleges violations by the defendants of certain permits and environmental statutes said to apply to the
facility. The complaint seeks the completion of certain actions regarding the facility, a civil fine from each defendant of $10,000 under the Coastal Zone Management Act, civil penalties of $50,000 per day for each alleged violation of the Water
Pollution Control Act, $10,000 per day for alleged intentional and knowing violations of the Coastal Zone Management Act, exemplary damages, costs, interest and attorneys fees, and other such amounts as may be just and proper. SCA
responded to the complaint on February 2, 2007 by filing an answer and motion to disqualify DPNRs private attorney. The parties fully briefed the motion and are awaiting a decision from the court. In October 2007, plaintiff and defendant
SCRG entered into a settlement agreement resolving claims against SCRG. Plaintiff filed a notice of dismissal with the court, and the court entered an order dismissing SCRG on November 2, 2007. SCA objected to the dismissal and requested that
the court withdraw its order, and the parties have briefed SCAs objection and request. A decision from the court is pending. On November 10, 2007, SCA filed a motion for summary judgment seeking dismissal of all claims in the case. The
parties completed briefing of the motion in January 2008. The court has not yet ruled on the motion.

Cost Recovery Action. As previously reported, and noted above, in October 2007, DPNR filed a
CERCLA cost recovery suit against SCRG. After the court denied entry of the Agreement and Consent Decree in October 2008, the cost recovery case lay dormant until May 2009, when SCRG filed a third-party complaint for contribution and other relief
against several third-party defendants, including AWA and SCA. SCRG filed an amended third-party complaint on August 31, 2009, and served it on third-party defendants in mid-September 2009. AWA and SCA filed their answer to the amended
third-party complaint on October 30, 2009. On January 8, 2010, DPNR filed a motion to assert claims directly against certain third-party defendants, including AWA and SCA. On January 29, 2010, the court granted plaintiffs
motion. On November 15, 2010, plaintiff and all defendants filed motions for summary judgment addressing various issues relating to liability, recoverability of costs, and divisibility of harm. On March 4, 2011, the court issued a
memorandum and order granting defendants motions for summary judgment and entered judgment in favor of the defendants. On March 18, 2011, DPNR filed a motion for reconsideration of the order and judgment, and that motion was denied on
April 15, 2011. On May 16, 2011, DPNR filed an appeal with the U.S. Court of Appeals for the Third Circuit. That appeal remains pending.

Abednego. As previously reported, on January 14, 2010, Alcoa was served with a complaint involving approximately 2,900 individual persons claimed to be residents of St. Croix who are
alleged to have suffered personal injury or property damage from Hurricane Georges or winds blowing material from the property since the time of the hurricane. This complaint, Abednego, et al. v. Alcoa, et al. was filed in the Superior Court of the
Virgin Islands, St. Croix Division. The complaint names as defendants the same entities as were sued in the February 1999 action earlier described and have added as a defendant the current owner of the alumina facility property. In February 2010,
Alcoa and SCA removed the case to the federal court for the District of the Virgin Islands. Subsequently, plaintiffs filed motions to remand the case to territorial court as well as a third amended complaint, and defendants have moved to dismiss the
case for failure to state a claim upon which relief can be granted. On March 17, 2011, the court granted plaintiffs motion to remand to territorial court. Thereafter, Alcoa filed a motion for allowance of appeal. The motion was denied on
May 18, 2011. The parties await assignment of the case to a trial judge.

Proposed Consent Decree for Certain St. Croix
Proceedings. On November 21, 2011, Alcoa, SCRG and the DPNR lodged a proposed Consent Decree with the U.S. District Court for the Virgin Islands, which Consent Decree contains terms of a settlement between the parties resolving the
following matters:



the Contract Action;



the NRD Action;



the SCA-Only Territorial Action;



the Multi-Party Enforcement Action; and



the Cost Recovery Action.

On January 12, 2012, the court held a hearing on the issue of whether to approve and enter the Consent Decree. On February 13, 2012 the court
granted the motion to enter the Consent Decree.

Other Contingencies

In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against Alcoa, including those pertaining to environmental, product
liability, and safety and health matters. While the amounts claimed in these other matters may be substantial, the ultimate liability cannot now be determined because of the considerable uncertainties that exist. Therefore, it is possible that the
companys liquidity or results of operations in a particular period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters
that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the financial position of the company.

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104 is included in Exhibit 95 of this report, which is incorporated herein by reference.

The companys common stock is listed on the New York Stock Exchange where it trades under the symbol AA. The companys quarterly high and low
trading stock prices and dividends per common share for 2011 and 2010 are shown below.

2011

2010

Quarter

High

Low

Dividend

High

Low

Dividend

First

$

17.75

$

15.42

$

0.03

$

17.60

$

12.26

$

0.03

Second

18.47

14.56

0.03

15.15

10.01

0.03

Third

16.60

9.56

0.03

12.25

9.81

0.03

Fourth

11.66

8.45

0.03

15.63

11.81

0.03

Year

18.47

8.45

$

0.12

17.60

9.81

$

0.12

The number of holders of common stock was approximately 319,000 as of February 6, 2012.

The following graph compares the most recent five-year performance of Alcoas common stock with (1) the Standard &
Poors 500® Index and (2) the Standard & Poors 500® Materials Index, a group of 27 companies categorized by Standard & Poors as active in the
materials market sector. Such information shall not be deemed to be filed.

This column includes the deemed surrender of existing shares of Alcoa common stock to the company by stock-based compensation plan participants to satisfy the exercise
price of employee stock options at the time of exercise. These surrendered shares are not part of any publicly announced share repurchase program.

The data presented in the Selected Financial Data table should be read in conjunction with the information provided in
Managements Discussion and Analysis of Financial Condition and Results of Operations in Part II Item 7 and the Consolidated Financial Statements in Part II Item 8 of this Form 10-K.

Item 7.

Managements Discussion and Analysis of Financial Condition and Results of Operations.

(dollars in millions, except per-share amounts and ingot prices; production and shipments in thousands of metric tons [kmt])

Overview

Our
Business

Alcoa is the world leader in the production and management of primary aluminum, fabricated aluminum, and alumina combined,
through its active and growing participation in all major aspects of the industry: technology, mining, refining, smelting, fabricating, and recycling. Aluminum is a commodity that is traded on the London Metal Exchange (LME) and priced daily based
on market supply and demand. Aluminum and alumina represent more than 80% of Alcoas revenues, and the price of aluminum influences the operating results of Alcoa. Nonaluminum products include precision castings and aerospace and industrial
fasteners. Alcoas products are used worldwide in aircraft, automobiles, commercial transportation, packaging, building and construction, oil and gas, defense, consumer electronics, and industrial applications.

Alcoa is a global company operating in 31 countries. Based upon the country where the point of sale
occurred, the U.S. and Europe generated 49% and 27%, respectively, of Alcoas sales in 2011. In addition, Alcoa has investments and operating activities in, among others, Australia, Brazil, China, Guinea, Iceland, Russia, and Saudi Arabia, all
of which present opportunities for substantial growth. Governmental policies, laws and regulations, and other economic factors, including inflation and fluctuations in foreign currency exchange rates and interest rates, affect the results of
operations in these countries.

Management Review of 2011 and Outlook for the Future

At the end of 2010, management had projected growth in global aluminum demand of 12% for 2011. While demand started strong in the year, it weakened in
the second half, resulting in an estimated actual growth rate of 10%. Additionally, LME pricing levels declined steadily from the peak reached in mid-2011, resulting in a more than 27% decrease by the end of the year. The Company also faced demand
destruction for aluminum end products in Europe and significant headwinds for certain input costs during 2011. Despite these challenges, the 2011 financial results of Alcoa improved over 2010, due in large part to the decisions made by management.
At the beginning of 2011, management continued its previous actions from its two-year cash sustainability program, which began in 2009 to achieve targets related to procurement efficiencies, overhead rationalization, and working capital
improvements. Additionally, management planned to further improve Alcoas liquidity position by maintaining a consistent level of capital expenditures with that of 2010, refinancing long-term debt set to mature during 2013, and contributing
equity to satisfy a large portion of the Companys 2011 obligation to its U.S. pension plans.

The following financial information
reflects some key metrics of Alcoas 2011 results:



Sales of $24,951, a 19% improvement over 2010;



Income from continuing operations of $614, or $0.55 per diluted share, an increase of $352 compared to 2010;



Total segment after-tax operating income of $1,893, a 33% improvement over 2010;



Cash from operations of $2,193, in excess of $2,000 for the second consecutive year;



Capital expenditures of $1,287, under $1,500 for the second consecutive year;



Cash on hand at the end of the year of $1,939, in excess of $1,000 for the third consecutive year;



Increase in total debt of $206, but a decrease of $1,207 over the past three years; and



Debt-to-capital ratio of 35%, consistent with the targeted range of 30% to 35%.

Management is projecting continued growth (increase of 7%) in the global consumption of primary aluminum in 2012, but at a slower pace than 2011. China
and India are expected to have double-digit increases in aluminum demand while Russia and Brazil are expected to have 4% to 5% increases in aluminum consumption rates. Such growth, along with industry-wide capacity curtailments, will result in
demand exceeding supply for primary aluminum. For alumina, growth in global consumption is estimated to be 9%, and overall supply and demand are expected to be balanced. Management also anticipates improved market conditions for aluminum products in
most major global end markets, particularly aerospace and automotive. On the cost side, energy prices and certain raw materials are expected to continue to be a challenge. Management has established and is committed to achieving the following
specific goals in 2012:



producing additional savings over those realized in 2009 through 2011 from procurement, overhead, and working capital programs;



generating positive cash flow from operations that will exceed capital spending; and

Looking ahead over the next two to four years, management will continue to focus on its aggressive
strategic targets established at the end of 2010. These targets include lowering Alcoas refining and smelting operations on the cost curve to the 23rd (from 30th) and 41st (from 51st) percentiles, respectively, by 2015 and driving revenue
growth in the midstream (increase of $2,500) and downstream (increase of $1,600) operations by 2013. In conjunction with the revenue targets, management is committed to improving margins that will exceed historical levels in the midstream and
downstream operations. In 2011, production significantly improved at the Juruti bauxite mine development, nameplate capacity was achieved for the São Luís refinery expansion, and a part of the Estreito hydroelectric power project
became operational. These developments, along with the planned full or partial curtailment of 240 kmt of smelting capacity in Europe and the full startup of Estreito, both expected to occur in 2012, and the completion of the aluminum complex in
Saudi Arabia by 2014, will help improve the Companys position on the cost curve. The midstream and downstream operations both achieved margins that exceeded historical levels and approximately 50% of the respective revenue growth targets in
2011. The midstream operations will continue to build on this success in 2012, through continued volume growth in Russia and China, including emerging markets like consumer electronics, and expansion of the rolling mill in Davenport, IA to meet
rising U.S. automotive demand, due to changing emissions regulations. The downstream operations will further their accomplishments in 2012 through continued innovative solutions to meet a wide-range of customer needs.

Results of Operations

Earnings Summary

Income from continuing operations attributable to Alcoa for 2011 was
$614, or $0.55 per diluted share, compared with $262, or $0.25 per share, in 2010. The improvement of $352 in continuing operations was primarily due to the following: higher realized prices for alumina and aluminum; stronger volumes in the
midstream and downstream segments; net productivity improvements; and a net favorable change in mark-to-market derivative contracts; partially offset by higher input costs; net unfavorable foreign currency movements; higher income taxes due to
better operating results; and additional restructuring charges.

Income from continuing operations attributable to Alcoa for 2010 was $262, or
$0.25 per share, compared with a loss from continuing operations of $985, or $1.06 per share, in 2009. The improvement of $1,247 in continuing operations was primarily due to the following: increases in realized prices for alumina and aluminum;
ongoing net costs savings and productivity improvements across all segments; and the absence of both a charge associated with a European Commission electricity pricing matter in Italy and a loss on the sale of an equity investment; partially offset
by net unfavorable foreign currency movements; higher energy costs; unfavorable changes in LIFO (last in, first out) inventories; additional depreciation charges and operating costs for growth projects; and the absence of gains on the exchange of
equity interests and on the acquisition of bauxite and refinery interests.

Net income attributable to Alcoa for 2011 was $611, or $0.55 per
share, compared with net income of $254, or $0.24 per share, in 2010, and a net loss of $1,151, or $1.23 per share, in 2009. In 2011, net income of $611 included a loss from discontinued operations of $3, and in 2010 and 2009, net income of $254 and
net loss of $1,151 included a loss from discontinued operations of $8 and $166, respectively.

In March 2009, management initiated a series of
operational and financial actions to significantly improve Alcoas cost structure and liquidity. Operational actions included procurement efficiencies and overhead rationalization to reduce costs and working capital initiatives to yield
significant cash improvements. Financial actions included a reduction in the quarterly common stock dividend from $0.17 per share to $0.03 per share, which began with the dividend paid on May 25, 2009, and the issuance of 172.5 million
shares of common stock and $575 in convertible notes that collectively yielded $1,438 in net proceeds. In January 2010, management initiated further operational actions to not only maintain the procurement and overhead savings and working capital
improvements achieved in 2009, but to improve on them throughout 2010. Also, a further reduction in capital expenditures was planned in order to achieve the level necessary to sustain operations without sacrificing the quality of Alcoas
alumina and aluminum products. In 2011, management continued its previous actions to maintain the achieved procurement and overhead savings from the past two years and to further improve cash with working capital initiatives. Additionally,
maintaining a level of capital expenditures consistent with that of 2010 was planned. During 2012, management plans to continue the actions from

the past three years to achieve additional procurement and overhead savings, to further improve on working capital, and to maintain a consistent level of capital expenditures.

In late 2008, management made the decision to reduce Alcoas aluminum and alumina production in response to the then global economic downturn. As a
result of this decision, reductions of 750 kmt, or 18%, of annualized output from Alcoas global smelting system were implemented (includes previous curtailment at Rockdale, TX in June 2008). Accordingly, reductions in alumina output were also
initiated with a plan to reduce production by 1,500 kmt-per-year across the global refining system. The aluminum and alumina production curtailments were completed in early 2009 as planned. Smelters in Rockdale (267 kmt-per-year) and Tennessee (215
kmt-per-year) were fully curtailed while another 268 kmt-per-year was partially curtailed at various other locations. The refinery in Point Comfort, TX was partially curtailed by approximately 1,500 kmt-per-year between the end of 2008 and the
beginning of 2009 (384 kmt-per-year remains curtailed as of December 31, 2011). In mid-2009, further action became necessary resulting in the decision to fully curtail the Massena East, NY smelter (125 kmt-per-year) and partially curtail the
Suralco (Suriname) refinery (870 kmt-per-year: 793 kmt-per-year remains curtailed as of December 31, 2011).

In 2011, Alcoa restarted the
following previously curtailed production capacity in the U.S.: Massena East (125 kmt-per-year); Wenatchee, WA (43 kmt-per-year); and Ferndale, WA (Intalco: 47 kmt-per-year (11 kmt more than previously planned)). These restarts increased aluminum
production by approximately 150 kmt during 2011 and are expected to increase aluminum production by 215 kmt on an annual basis in 2012 and beyond and occurred to help meet anticipated growth in aluminum demand and to meet obligations outlined in
power agreements with energy providers.

In late 2011, management approved the permanent shutdown and demolition of the smelter located in
Tennessee and two potlines (capacity of 76 kmt-per-year) at the smelter located in Rockdale (four potlines remain). This decision was made after a comprehensive strategic analysis was performed to determine the best course of action for each
facility. Factors leading to this decision were in general focused on achieving sustained competitiveness and included, among others: lack of an economically viable, long-term power solution; changed market fundamentals; cost competitiveness;
required future capital investment; and restart costs.

Also, at the end of 2011, management approved a partial or full curtailment of three
European smelters as follows: Portovesme, Italy (150 kmt-per-year); Avilés, Spain (46 kmt out of 93 kmt-per-year); and La Coruña, Spain (44 kmt out of 87 kmt-per-year). These curtailments are expected to be completed in the first half
of 2012. The curtailment of the Portovesme smelter may lead to the permanent closure of the facility, while the curtailments at the two smelters in Spain are planned to be temporary. These actions are the result of uncompetitive energy positions,
combined with rising material costs and falling aluminum prices (mid-2011 to late 2011).

SalesSales for 2011 were $24,951
compared with sales of $21,013 in 2010, an improvement of $3,938, or 19%. The increase was primarily due to a rise in realized prices for alumina and aluminum, better pricing in the midstream segment, and higher volumes in the Primary Metals segment
and virtually all businesses in the midstream and downstream segments.

Sales for 2010 were $21,013 compared with sales of $18,439 in 2009, an
improvement of $2,574, or 14%. The increase was mainly driven by a rise in realized prices for alumina and aluminum, as a result of significantly higher LME prices, favorable pricing in the midstream segment, and sales from the smelters in Norway
(acquired on March 31, 2009: increase of $332), slightly offset by the absence of sales from divested businesses (Transportation Products Europe and most of Global Foil: decrease of $175) and unfavorable mix in the downstream segment.

Cost of Goods SoldCOGS as a percentage of Sales was 82.1% in 2011 compared with 81.7% in 2010. The percentage was negatively
impacted by higher energy and raw materials costs and net unfavorable foreign currency movements due to a weaker U.S. dollar, mostly offset by the previously mentioned higher realized prices and net productivity improvements.

COGS as a percentage of Sales was 81.7% in 2010 compared with 91.7% in 2009. The percentage was positively
impacted by the significant rise in realized prices for alumina and aluminum; net cost savings and productivity improvements across all segments; and the absence of a charge related to a European Commissions decision on electricity pricing for
smelters in Italy ($250); somewhat offset by net unfavorable foreign currency movements due to a weaker U.S. dollar; unfavorable LIFO adjustments, as a result of the considerable rise in LME prices, and a significantly smaller reduction in LIFO
inventory quantities; increases in energy costs; and higher operating costs for Brazil growth projects placed in service.

Selling, General
Administrative, and Other ExpensesSG&A expenses were $1,027, or 4.1% of Sales, in 2011 compared with $961, or 4.6% of Sales, in 2010. The increase of $66 was principally the result of higher labor costs and an increase in bad debt
expense. The increase in labor costs was the result of a higher average employee base and a higher cost of employee benefits. The higher bad debt expense was caused by charges for anticipated customer credit losses, primarily related to those in
Europe.

SG&A expenses were $961, or 4.6% of Sales, in 2010 compared with $1,009, or 5.5% of Sales, in 2009. The decline of $48 was mostly
due to reductions in expenses for contractors and consultants; lower deferred compensation, as a result of a decline in plan performance; and decreases in bad debt expense and information technology expenditures. An increase in labor costs,
principally due to higher annual incentive and performance compensation and employee benefits costs (employer matching savings plan contributions for U.S. salaried participants were suspended during 2009) somewhat offset the aforementioned expense
reductions.

Research and Development ExpensesR&D expenses were $184 in 2011 compared with $174 in 2010 and $169 in 2009. The
increase in 2011 as compared to 2010 and in 2010 as compared to 2009 was mainly driven by incremental increases across varying expenses necessary to support R&D activities.

Provision for Depreciation, Depletion, and AmortizationThe provision for DD&A was $1,479 in 2011 compared with $1,450 in 2010. The increase of $29, or 2%, was mostly due to a portion of
the assets placed into service in mid-2011 related to a new hydroelectric power facility in Brazil, along with a number of small increases at various locations.

The provision for DD&A was $1,450 in 2010 compared with $1,311 in 2009. The increase of $139, or 11%, was principally the result of the assets placed into service during the second half of 2009
related to the Juruti bauxite mine development and São Luís refinery expansion in Brazil, the smelters in Norway (acquired on March 31, 2009), the new Bohai (China) flat-rolled product facility, and a high-quality coated sheet
line at the Samara (Russia) facility, slightly offset by the cessation in DD&A due to the decision in early 2010 to permanently shut down and demolish two U.S. smelters (see Restructuring and Other Charges below).

Restructuring and Other ChargesRestructuring and other charges for each year in the three-year period ended December 31, 2011 were
comprised of the following:

2011

2010

2009

Asset impairments

$

150

$

139

$

54

Layoff costs

93

43

186

Other exit costs

61

58

37

Reversals of previously recorded layoff and other exit costs

(23

)

(33

)

(40

)

Restructuring and other charges

$

281

$

207

$

237

Layoff costs were recorded based on approved detailed action plans submitted by the operating locations that specified
positions to be eliminated, benefits to be paid under existing severance plans, union contracts or statutory requirements, and the expected timetable for completion of the plans.

2011 ActionsIn 2011, Alcoa recorded Restructuring and other charges of $281 ($181 after-tax
and noncontrolling interests), which were comprised of the following components: $127 ($82 after-tax) in asset impairments and $36 ($23 after-tax) in other exit costs related to the permanent shutdown and planned demolition of certain idled
structures at two U.S. locations (see below); $93 ($68 after-tax and noncontrolling interests) for the layoff of approximately 1,600 employees (820 in the Primary Metals segment, 470 in the Flat-Rolled Products segment, 160 in the Alumina segment,
20 in the Engineered Products and Solutions segment, and 130 in Corporate), including the effects of planned smelter curtailments (see below); $23 ($12 after-tax and noncontrolling interests) for other asset impairments, including the write-off of
the carrying value of an idled structure in Australia that processed spent pot lining and adjustments to the fair value of the one remaining foil location while it was classified as held for sale due to foreign currency movements; $20 ($8 after-tax
and noncontrolling interests) for a litigation matter related to the former St. Croix location; a net charge of $5 ($4 after-tax) for other small items; and $23 ($16 after-tax) for the reversal of previously recorded layoff reserves due to normal
attrition and changes in facts and circumstances, including a change in plans for Alcoas aluminum powder facility in Rockdale, TX.

In
late 2011, management approved the permanent shutdown and demolition of certain facilities at two U.S. locations, each of which was previously temporarily idled for various reasons. The identified facilities are the smelter located in Alcoa, TN
(capacity of 215 kmt-per-year) and two potlines (capacity of 76 kmt-per-year) at the smelter located in Rockdale, TX (remaining capacity of 191 kmt-per-year composed of four potlines). Demolition and remediation activities related to these actions
will begin in the first half of 2012 and are expected to be completed in 2015 for the Tennessee smelter and in 2013 for the two potlines at the Rockdale smelter. This decision was made after a comprehensive strategic analysis was performed to
determine the best course of action for each facility. Factors leading to this decision were in general focused on achieving sustained competitiveness and included, among others: lack of an economically viable, long-term power solution; changed
market fundamentals; cost competitiveness; required future capital investment; and restart costs. The asset impairments of $127 represent the write off of the remaining book value of properties, plants, and equipment related to these facilities.
Additionally, remaining inventories, mostly operating supplies, were written down to their net realizable value resulting in a charge of $6 ($4 after-tax), which was recorded in COGS. The other exit costs of $36 represent $18 ($11 after-tax) in
environmental remediation and $17 ($11 after-tax) in asset retirement obligations, both triggered by the decision to permanently shut down and demolish these structures, and $1 ($1 after-tax) in other related costs.

Also, at the end of 2011, management approved a partial or full curtailment of three European smelters as follows: Portovesme, Italy (150 kmt-per-year);
Avilés, Spain (46 kmt out of 93 kmt-per-year); and La Coruña, Spain (44 kmt out of 87 kmt-per-year). These curtailments are expected to be completed in the first half of 2012. The curtailment of the Portovesme smelter may lead to the
permanent closure of the facility, while the curtailments at the two smelters in Spain are planned to be temporary. These actions are the result of uncompetitive energy positions, combined with rising material costs and falling aluminum prices
(mid-2011 to late 2011). As a result of these decisions, Alcoa recorded costs of $33 ($31 after-tax) for the layoff of approximately 650 employees. As Alcoa engages in discussions with the respective employee representatives and governments,
additional charges may be recognized in 2012.

As of December 31, 2011, approximately 380 of the 1,600 employees were terminated. The
remaining terminations for the 2011 restructuring programs are expected to be completed by the end of 2012. In 2011, cash payments of $24 were made against layoff reserves related to the 2011 restructuring programs.

2010 ActionsIn 2010, Alcoa recorded Restructuring and other charges of $207 ($130 after-tax and noncontrolling interests), which were
comprised of the following components: $127 ($80 after-tax and noncontrolling interests) in asset impairments and $46 ($29 after-tax and noncontrolling interests) in other exit costs related to the permanent shutdown and planned demolition of
certain idled structures at five U.S. locations (see below); $43 ($29 after-tax and noncontrolling interests) for the layoff of approximately 875 employees (625 in the Engineered Products and Solutions segment; 75 in the Primary Metals segment; 60
in the Alumina segment; 25 in the Flat-Rolled Products segment; and 90 in Corporate); $22 ($14 after-tax) in net charges (including $12 ($8 after-tax) for asset impairments) related to divested and to be divested businesses (Automotive Castings,
Global Foil, Transportation Products Europe, and Packaging and Consumer) for, among other items, the settlement of a contract with a former customer, foreign

currency movements, working capital adjustments, and a tax indemnification; $2 ($2 after-tax and noncontrolling interests) for various other exit costs; and $33 ($24 after-tax and noncontrolling
interests) for the reversal of prior periods layoff reserves, including a portion of those related to the Portovesme smelter in Italy due to the execution of a new power agreement.

In early 2010, management approved the permanent shutdown and demolition of the following structures, each of which was previously temporarily idled for different reasons: the Eastalco smelter located in
Frederick, MD (capacity of 195 kmt-per-year); the smelter located in Badin, NC (capacity of 60 kmt-per-year); an aluminum fluoride plant in Point Comfort, TX; a paste plant and cast house in Massena, NY; and one potline at the smelter in Warrick, IN
(capacity of 40 kmt-per-year). This decision was made after a comprehensive strategic analysis was performed to determine the best course of action for each facility. Factors leading to this decision included current market fundamentals, cost
competitiveness, other existing idle capacity, required future capital investment, and restart costs, as well as the elimination of ongoing holding costs. The asset impairments of $127 represent the write off of the remaining book value of
properties, plants, and equipment related to these facilities. Additionally, remaining inventories, mostly operating supplies, were written down to their net realizable value resulting in a charge of $8 ($5 after-tax and noncontrolling interests),
which was recorded in COGS. The other exit costs of $46 represent $30 ($19 after-tax and noncontrolling interests) in asset retirement obligations and $14 ($9 after-tax) in environmental remediation, both triggered by the decision to permanently
shut down and demolish these structures, and $2 ($1 after-tax and noncontrolling interests) in other related costs.

As of December 31,
2011, approximately 790 of the 875 employees were terminated. The remaining terminations are expected to be completed by the end of 2012. In 2011 and 2010, cash payments of $7 and $21, respectively, were made against layoff reserves related to 2010
restructuring programs.

2009 ActionsIn 2009, Alcoa recorded Restructuring and other charges of $237 ($151 after-tax and
noncontrolling interests), which were comprised of the following components: $177 ($121 after-tax and noncontrolling interests) for the layoff of approximately 6,600 employees (2,980 in the Engineered Products and Solutions segment; 2,190 in the
Flat-Rolled Products segment; 1,080 in the Primary Metals segment; 180 in the Alumina segment; and 170 in Corporate) to address the impact of the global economic downturn on Alcoas businesses and a $9 ($6 after-tax) curtailment charge due to
the remeasurement of pension plans as a result of the workforce reductions; $41 ($20 after-tax) in adjustments to the Global Foil and Transportation Products Europe businesses held for sale due to unfavorable foreign currency movements for both
businesses and a change in the estimated fair value for the Global Foil business and $13 ($11 after-tax) in other asset impairments; $18 ($12 after-tax) for the write-off of previously capitalized third-party costs related to potential business
acquisitions due to the adoption of changes to accounting for business combinations; net charges of $19 ($10 after-tax and noncontrolling interests) for various other items, such as accelerated depreciation and lease termination costs for shutdown
facilities; and $40 ($29 after-tax and noncontrolling interests) for reversals of previously recorded layoff and other exit costs due to normal attrition and changes in facts and circumstances.

As of December 31, 2011, approximately 5,700 of the 6,000 employees were terminated. The total number of employees associated with 2009
restructuring programs was updated in 2010 to reflect changes in plans (e.g., the previously mentioned new power agreement at the Portovesme smelter in Italy  see 2010 Actions above), natural attrition, and other factors. The remaining
terminations are expected to be completed by the end of 2012. In 2011 and 2010, cash payments of $13 and $60, respectively, were made against layoff reserves related to 2009 restructuring programs.

Alcoa does not include Restructuring and other charges in the results of its reportable segments. The
pretax impact of allocating such charges to segment results would have been as follows:

2011

2010

2009

Alumina

$

39

$

12

$

5

Primary Metals

212

145

30

Flat-Rolled Products

19

(11

)

65

Engineered Products and Solutions

(3

)

18

64

Segment total

267

164

164

Corporate

14

43

73

Total restructuring and other charges

$

281

$

207

$

237

Interest ExpenseInterest expense was $524 in 2011 compared with $494 in 2010. The increase of $30, or 6%,
was primarily due to a $41 net charge related to the early retirement of various outstanding notes ($74 in purchase premiums paid partially offset by a $33 gain for in-the-money interest rate swaps), somewhat offset by the absence of a
$14 net charge related to the early retirement of various outstanding notes ($42 in purchase premiums paid partially offset by a $28 gain for in-the-money interest rate swaps).

Interest expense was $494 in 2010 compared with $470 in 2009. The increase of $24, or 5%, was principally caused by a $69 decline in interest capitalized, mainly the result of placing the Juruti and
São Luís growth projects in service during the second half of 2009; and a $14 net charge related to the early retirement of various outstanding notes ($42 in purchase premiums paid partially offset by a $28 gain for
in-the-money interest rate swaps); mostly offset by a 7% lower average debt level, primarily due to the absence of commercial paper resulting from Alcoas improved liquidity position; and lower amortization expense of financing
costs, principally related to the fees paid (fully amortized in October 2009) for the former $1,900 364-day senior unsecured revolving credit facility.

Other (Income) Expenses, netOther income, net was $87 in 2011 compared with Other expenses, net of $5 in 2010. The change of $92 was mainly the result of a net favorable change of $89 in
mark-to-market derivative contracts, a gain of $43 from the sale of land in Australia, and higher equity income from an investment in a natural gas pipeline in Australia due to the recognition of a discrete income tax benefit by the consortium
(Alcoa World Alumina and Chemicals share of the benefit was $24), slightly offset by a decrease in the cash surrender value of company-owned life insurance.

Other expenses, net was $5 in 2010 compared with Other income, net of $161 in 2009. The change of $166 was mostly due to the absence of a $188 gain on the Elkem/Sapa AB exchange transaction, a $92 gain
related to the acquisition of a BHP Billiton subsidiary in the Republic of Suriname, and a $22 gain on the sale of property in Vancouver, WA; net foreign currency losses; and a smaller improvement in the cash surrender value of company-owned life
insurance; partially offset by the absence of both a $182 realized loss on the sale of an equity investment and an equity loss related to Alcoas former 50% equity stake in Elkem; and a net favorable change of $25 in mark-to-market derivative
contracts.

Income TaxesAlcoas effective tax rate was 24.0% (provision on income) in 2011 compared with the U.S. federal
statutory rate of 35%. The effective tax rate differs from the U.S. federal statutory rate mainly due to foreign income taxed in lower rate jurisdictions.

Alcoas effective tax rate was 26.9% (provision on income) in 2010 compared with the U.S. federal statutory rate of 35%. The effective tax rate differs from the U.S. federal statutory rate primarily
due to foreign income taxed in lower rate jurisdictions, a $57 discrete income tax benefit for the reversal of a valuation allowance as a result of previously restricted net operating losses of a foreign subsidiary now available, a $24 discrete
income tax benefit related to a Canadian provincial tax law change permitting a tax return to be filed in U.S. dollars, and a $13 net discrete income tax benefit for various other items, partially offset by a $79 discrete income tax charge as a
result of a change in the tax

treatment of federal subsidies received related to prescription drug benefits provided under certain retiree health care benefit plans that were determined to be actuarially equivalent to
Medicare Part D and a $19 discrete income tax charge based on settlement discussions of several matters with international taxing authorities (this amount represents a decrease to Alcoas unrecognized tax benefits).

Alcoas effective tax rate was 38.3% (benefit on a loss) in 2009 compared with the U.S. federal statutory rate of 35%. The effective tax rate
differs from the U.S. federal statutory rate principally due to a $12 income tax benefit related to the noncontrolling interests share of the gain associated with the acquisition of a BHP Billiton subsidiary in the Republic of Suriname and the
following discrete tax items: a $71 benefit for the reorganization of an equity investment; a $34 benefit for the reversal of a valuation allowance on foreign deferred tax assets; a $31 benefit for a tax rate change (from 15% to 18%) in Iceland; a
$31 benefit related to a Canadian tax law change allowing a tax return to be filed in U.S. dollars; a $10 benefit related to a change in the sale structure of two locations included in the Global Foil business than originally anticipated; and a $7
benefit related to the Elkem/Sapa AB exchange transaction. Partially offsetting these benefits were items related to smelter operations in Italy, which included a $41 valuation allowance placed on existing deferred tax assets and charges not tax
benefitted as follows: $250 related to a recent decision by the European Commission on electricity pricing, $15 for environmental remediation, and $15 for layoffs.

Management anticipates that the effective tax rate in 2012 will be approximately 27%. However, changes in the current economic environment, tax legislation or rate changes, currency fluctuations, ability
to realize deferred tax assets, and the results of operations in certain taxing jurisdictions may cause this estimated rate to fluctuate.

In
December 2011, one of the Companys subsidiaries in Brazil applied for a tax holiday related to its expanded mining and refining operations. If approved, the tax rate for this subsidiary will decrease significantly, resulting in future cash tax
savings over the 10-year holiday period (would be effective as of January 1, 2012). Additionally, the net deferred tax asset of the subsidiary would be remeasured at the lower rate in the period the holiday is approved. This remeasurement would
result in a decrease to the net deferred tax asset and a noncash charge to earnings of approximately $60 to $90.

Noncontrolling
InterestsNet income attributable to noncontrolling interests was $194 in 2011 compared with $138 in 2010. The increase of $56 was largely the result of higher earnings at Alcoa World Alumina and Chemicals (AWAC), which is owned 60% by
Alcoa and 40% by Alumina Limited. The improved earnings at AWAC were mainly driven by higher realized prices, partially offset by higher input costs and net unfavorable foreign currency movements due to a weaker U.S. dollar.

Net income attributable to noncontrolling interests was $138 in 2010 compared with $61 in 2009. The increase of $77 was mostly due to higher earnings at
AWAC, which is owned 60% by Alcoa and 40% by Alumina Limited. The improved earnings at AWAC were attributed primarily to a rise in realized prices, partially offset by net unfavorable foreign currency movements due to a weaker U.S. dollar, higher
depreciation expense and operating costs related to the Juruti and São Luís growth projects placed into service in the second half of 2009, and the absence of a gain recognized on the acquisition of a BHP Billiton subsidiary in the
Republic of Suriname.

Loss From Discontinued OperationsLoss from discontinued operations in 2011 was $3 comprised of an
additional loss of $3 ($5 pretax) related to the wire harness and electrical portion of the Electrical and Electronic Solutions (EES) business as a result of a negotiated preliminary settlement related to claims filed in 2010 against Alcoa by
Platinum Equity in an insolvency proceeding in Germany, a net gain of $2 ($3 pretax) related to both the wire harness and electrical portion and the electronics portion of the EES business for a number of small post-closing and other adjustments,
and a $2 ($2 pretax) reversal of the gain recognized in 2006 related to the sale of the home exteriors business for an adjustment to an outstanding obligation, which was part of the terms of sale.

Loss from discontinued operations in 2010 was $8 comprised of an additional loss of $6 ($9 pretax) related to the wire harness and electrical portion of
the EES business as a result of a contract settlement with a former customer of this business and an additional loss of $2 ($4 pretax) related to the electronics portion of the EES business for the settling of working capital, which was not included
in the divestiture transaction.

Loss from discontinued operations in 2009 was $166 comprised of a $129 ($168 pretax) loss on the
divestiture of the wire harness and electrical portion of the EES business, a $9 ($13 pretax) loss on the divestiture of the electronics portion of the EES business, and the remainder was for the operational results of the EES business prior to the
divestitures.

In late 2008, Alcoa reclassified the EES business to discontinued operations based on the decision to divest the business. The
divestiture of the wire harness and electrical portion of the EES business was completed in June 2009 and the divestiture of the electronics portion of the EES business was completed in December 2009. The results of the Engineered Products and
Solutions segment were reclassified to reflect the movement of the EES business into discontinued operations.

Segment Information

Alcoas operations consist of four worldwide reportable segments: Alumina, Primary Metals, Flat-Rolled Products, and Engineered
Products and Solutions. Segment performance under Alcoas management reporting system is evaluated based on a number of factors; however, the primary measure of performance is the after-tax operating income (ATOI) of each segment. Certain items
such as the impact of LIFO inventory accounting; interest expense; noncontrolling interests; corporate expense (general administrative and selling expenses of operating the corporate headquarters and other global administrative facilities, along
with depreciation and amortization on corporate-owned assets); restructuring and other charges; discontinued operations; and other items, including intersegment profit eliminations and other metal adjustments, differences between tax rates
applicable to the segments and the consolidated effective tax rate, the results of the soft alloy extrusions business in Brazil, and other nonoperating items such as foreign currency transaction gains/losses and interest income are excluded from
segment ATOI.

ATOI for all reportable segments totaled $1,893 in 2011, $1,424 in 2010, and $(234) in 2009. See Note Q to the Consolidated
Financial Statements in Part II Item 8 of this Form 10-K for additional information. The following discussion provides shipments, sales, and ATOI data for each reportable segment and production data for the Alumina and Primary Metals segments
for each of the three years in the period ended December 31, 2011.

Alumina

2011

2010

2009

Alumina production (kmt)

16,486

15,922

14,265

Third-party alumina shipments (kmt)

9,218

9,246

8,655

Third-party sales

$

3,462

$

2,815

$

2,161

Intersegment sales

2,727

2,212

1,534

Total sales

$

6,189

$

5,027

$

3,695

ATOI

$

607

$

301

$

112

This segment represents a portion of Alcoas upstream operations and consists of the Companys worldwide
refinery system, including the mining of bauxite, which is then refined into alumina. Alumina is mainly sold directly to internal and external smelter customers worldwide or is sold to customers who process it into industrial chemical products. A
portion of this segments third-party sales are completed through the use of agents, alumina traders, and distributors. Slightly more than half of Alcoas alumina production is sold under supply contracts to third parties worldwide, while
the remainder is used internally by the Primary Metals segment.

In 2011, alumina production increased by 564 kmt compared to 2010. The
improvement was mostly the result of higher production at the São Luís (Brazil) refinery, as the ramp-up of the 2,100 kmt expanded capacity (the Alumina segments share is approximately 1,100 kmt-per-year) that began in late 2009
continued through 2011.

In 2010, alumina production increased by 1,657 kmt compared to 2009. The increase was mainly driven by the
Point Comfort, TX refinery as most of the 1,500 kmt-per-year curtailment initiated between the fourth quarter of 2008 and the first quarter of 2009 was restored. In addition, production included the continued ramp-up of the São Luís
refinery expansion and the 45% interest in the Suralco (Suriname) refinery acquired in mid-2009.

Third-party sales for the Alumina segment
improved 23% in 2011 compared with 2010, largely attributable to a 21% increase in realized prices, driven by the movement of customer contracts to alumina index pricing, benefits from improved spot prices, and improved pricing from LME-based
contracts. Third-party sales for this segment rose 30% in 2010 compared with 2009, primarily related to a 29% increase in realized prices, driven by significantly higher LME prices, coupled with a 7% increase in volumes.

Intersegment sales for the Alumina segment climbed 23% in 2011 compared with 2010 and 44% in 2010 compared with 2009. The increase in both period
comparisons was principally due to higher realized prices and an increase in demand from the Primary Metals segment.

ATOI for the Alumina
segment increased $306 in 2011 compared with 2010, mainly caused by the significant improvement in realized prices and a gain on the sale of land in Australia ($30), partially offset by considerably higher input costs, particularly related to
caustic and fuel oil, and net unfavorable foreign currency movements due to a weaker U.S. dollar, especially against the Australian dollar.

ATOI for this segment improved $189 in 2010 compared with 2009, mostly due to the significant increase in realized prices and benefits of cost savings
initiatives, particularly lower caustic costs. These positive impacts were partially offset by net unfavorable foreign currency movements due to a weaker U.S. dollar, particularly against the Australian dollar; higher depreciation expense and
operating costs (includes the impact of a failure of a ship unloader) associated with the start-up of the Juruti bauxite mine and the São Luís refinery expansion, both of which began in the second half of 2009; the absence of a $60
gain recognized on the acquisition of BHP Billitons interest in Suralco; and higher fuel oil costs.

In 2012, third-party sales will
continue to shift towards alumina index or spot pricing, and productivity improvements will be an intense area of focus. Also, significant, planned maintenance for operations in Australia during the first part of the year and higher costs for raw
materials are expected to negatively impact results. Additionally, alumina production across the global system will be reduced to reflect smelter curtailments as well as prevailing market conditions. Furthermore, in the second half of 2012,
Alcoas refineries in Australia will be subject to a carbon tax recently approved by the Australian government related to greenhouse gas emissions; this is not expected to have a significant impact on the Alumina segments results in 2012.

Primary Metals

2011

2010

2009

Aluminum production (kmt)

3,775

3,586

3,564

Third-party aluminum shipments (kmt)

2,981

2,845

3,038

Alcoas average realized price per metric ton of aluminum

$

2,636

$

2,356

$

1,856

Third-party sales

$

8,240

$

7,070

$

5,252

Intersegment sales

3,192

2,597

1,836

Total sales

$

11,432

$

9,667

$

7,088

ATOI

$

481

$

488

$

(612

)

This segment represents a portion of Alcoas upstream operations and consists of the Companys worldwide
smelter system. Primary Metals receives alumina, mostly from the Alumina segment, and produces primary aluminum used by Alcoas fabricating businesses, as well as sold to external customers, aluminum traders, and commodity markets. Results from
the sale of aluminum powder, scrap, and excess power are also included in this segment, as well as the results of aluminum derivative contracts and buy/resell activity. Primary aluminum produced by Alcoa and used internally is transferred to other
segments at prevailing market prices. The sale of primary aluminum represents more

than 90% of this segments third-party sales. Buy/resell activity refers to when this segment purchases metal from external or internal sources and resells such metal to external customers
or the midstream and downstream segments in order to maximize smelting system efficiency and to meet customer requirements.

At
December 31, 2011, Alcoa had 644 kmt of idle capacity on a base capacity of 4,518 kmt. In 2011, idle capacity decreased 234 kmt compared to 2010 due to the full restart of previously curtailed production capacity in the U.S.: Massena East, NY
(125 kmt-per-year); Wenatchee, WA (43 kmt-per-year); and Ferndale, WA (Intalco: 47 kmt-per-year (11 kmt more than previously planned)). These restarts increased aluminum production by approximately 150 kmt during 2011 and are expected to increase
aluminum production by 215 kmt on an annual basis in 2012 and beyond and occurred to help meet anticipated growth in aluminum demand and to meet obligations outlined in power agreements with energy providers.

In late 2011, management approved the permanent shutdown and demolition of certain facilities at two U.S. locations, each of which was previously
temporarily idled for various reasons. The identified facilities are the smelter located in Alcoa, TN (capacity of 215 kmt-per-year) and two potlines (capacity of 76 kmt-per-year) at the smelter located in Rockdale, TX (remaining capacity of 191
kmt-per-year composed of four potlines). This decision was made after a comprehensive strategic analysis was performed to determine the best course of action for each facility. Factors leading to this decision were in general focused on achieving
sustained competitiveness and included, among others: lack of an economically viable, long-term power solution; changed market fundamentals; cost competitiveness; required future capital investment; and restart costs.

Also, at the end of 2011, management approved a partial or full curtailment of three European smelters as follows: Portovesme, Italy (150 kmt-per-year);
Avilés, Spain (46 kmt out of 93 kmt-per-year); and La Coruña, Spain (44 kmt out of 87 kmt-per-year). These curtailments are expected to be completed in the first half of 2012. The curtailment of the Portovesme smelter may lead to the
permanent closure of the facility, while the curtailments at the two smelters in Spain are planned to be temporary. These actions are the result of uncompetitive energy positions, combined with rising material costs and falling aluminum prices
(mid-2011 to late 2011).

As a result of these decisions, idle capacity is expected to decrease by a net 51 kmt and base capacity will decline
by 291 kmt during 2012.

At December 31, 2010, Alcoa had 878 kmt of idle capacity on a base capacity of 4,518 kmt. In 2010, idle capacity
decreased 356 kmt compared to 2009 due to the restart of 32 kmt of previously curtailed production capacity at a smelter in Brazil, the decision to permanently curtail the smelters located in Frederick, MD (195 kmt-per-year) and Badin, NC (60
kmt-per-year) and one potline (40 kmt-per-year) at the smelter in Warrick, IN, and the restart of 61 kmt of previously curtailed production capacity at various smelters, slightly offset by the full curtailment of the Fusina smelter (44 kmt-per-year)
in Italy as a result of uneconomical power prices. In June 2010, Alcoa halted production at the Avilés smelter (93 kmt-per-year) in Spain due to torrential flooding. Production was restarted a few months after the flood and the smelter was at
full operating rate by the end of 2010. Base capacity dropped 295 kmt between December 31, 2010 and 2009 due to the previously mentioned permanent curtailments. The decision to permanently curtail these facilities was made after a comprehensive
strategic analysis was performed to determine the best course of action for each facility. Factors leading to this decision included current market fundamentals, cost competitiveness, other existing idle capacity, required future capital investment,
and restart costs, as well as the elimination of ongoing holding costs.

In 2011, aluminum production improved by 189 kmt, mainly the result
of the previously mentioned restarted capacity at Massena East, Ferndale, and Wenatchee, as well as higher production at the Avilés smelter (see above). In 2010, aluminum production increased by 22 kmt, mostly due to the two smelters located
in Norway (acquired full ownership on March 31, 2009, previously held a 50% equity interest), as well as a number of small increases at other smelters, but was virtually offset by the smelter curtailments during 2009 for Tennessee and Massena
East and during 2010 for Fusina and the halted production at the Avilés smelter.

Third-party sales for the Primary Metals segment improved 17% in 2011 compared with 2010, primarily due to
a 12% rise in average realized prices, driven by 10% higher average LME prices; higher volumes, largely attributable to the previously mentioned restarted U.S. capacity; and increased revenue from the sale of excess power. Third-party sales for this
segment climbed 35% in 2010 compared with 2009, mainly due to a 27% rise in average realized prices, driven by 31% higher average LME prices, and the acquisition of the smelters located in Norway (increase of $332), slightly offset by a decline in
both buy/resell activity and volumes.

Intersegment sales for the Primary Metals segment rose 23% in 2011 compared with 2010 and 41% in 2010
compared with 2009. The increase in both period comparisons was mainly the result of an improvement in realized prices, driven by the higher LME, and an increase in buy/resell activity.

ATOI for this segment improved $1,100 in 2010 compared with 2009, principally related to the significant increase in realized prices; the absence of a charge related to a European Commissions
decision on electricity pricing for smelters in Italy ($250); and benefits from cost savings initiatives, particularly coke and pitch; somewhat offset by much higher alumina and energy prices; the absence of a gain related to Alcoas
acquisition of the other 50% of the smelters in Norway ($112); and net unfavorable foreign currency movements due to a weaker U.S. dollar.

In
2012, pricing is anticipated to follow a 15-day lag on the LME and net productivity improvements are expected to continue. Also, planned maintenance for power plants during the first part of the year and higher energy costs are expected to
negatively impact results, while a benefit is anticipated in the second half of the year related to coke prices as a result of a shift in the supply-demand balance from short to long. Additionally, three smelters in Europe, representing 240
kmt-per-year, are expected to be fully or partially curtailed during the first half of the year. Furthermore, in the second half of 2012, Alcoas smelters in Australia will be subject to a carbon tax recently approved by the Australian
government related to greenhouse gas emissions; this is not expected to have a significant impact on the Primary Metals segments results in 2012.

Flat-Rolled Products

2011

2010

2009

Third-party aluminum shipments (kmt)

1,780

1,658

1,831

Third-party sales

$

7,642

$

6,277

$

6,069

Intersegment sales

218

180

113

Total sales

$

7,860

$

6,457

$

6,182

ATOI

$

266

$

220

$

(49

)

This segment represents Alcoas midstream operations, whose principal business is the production and sale of
aluminum plate and sheet. A small portion of this segments operations relate to foil produced at one plant in Brazil. This segment includes rigid container sheet (RCS), which is sold directly to customers in the packaging and consumer market
and is used to produce aluminum beverage cans. Seasonal increases in RCS sales are generally experienced in the second and third quarters of the year. This segment also includes sheet and plate used in the aerospace, automotive, commercial
transportation, and building and construction markets (mainly used in the production of machinery and equipment and consumer durables), which is sold directly to customers and through distributors. Approximately one-half of the third-party sales in
this segment consist of RCS, while the other one-half of third-party sales are derived from sheet and plate and foil used in industrial markets. While the customer base for flat-rolled products is large, a significant amount of sales of RCS, sheet,
and plate is to a relatively small number of customers.

mix. Third-party sales for this segment increased 3% in 2010 compared with 2009, principally due to better pricing and higher volumes in most key end markets, partially offset by lower volumes in
the segments can sheet business, largely due to a decision in early 2010 to curtail sales to a North American customer and the absence of sales ($125 in 2009) from two foil plants (Spain and China), which were divested in late 2009.

ATOI for the Flat-Rolled Products segment rose $46 in 2011 compared with 2010, primarily attributable to the previously mentioned positive
pricing, volume, and product mix impacts, partially offset by higher input costs and charges for anticipated customer credit losses. ATOI for this segment improved $269 in 2010 compared with 2009, mainly the result of both favorable pricing and
increased productivity across all businesses due to cost savings initiatives, including the operations in Russia as results turned profitable.

In 2012, continued demand strength in the aerospace and automotive markets is expected, although the outlook for Europe remains weak. Additionally, net
productivity improvements are anticipated, somewhat offset by higher energy and transportation costs.

Engineered Products and Solutions

2011

2010

2009

Third-party aluminum shipments (kmt)

221

197

180

Third-party sales

$

5,345

$

4,584

$

4,689

ATOI

$

539

$

415

$

315

This segment represents Alcoas downstream operations and includes titanium, aluminum, and super alloy investment
castings; forgings and fasteners; aluminum wheels; integrated aluminum structural systems; and architectural extrusions used in the aerospace, automotive, building and construction, commercial transportation, and power generation markets. These
products are sold directly to customers and through distributors. Additionally, hard alloy extrusions products, which are also sold directly to customers and through distributors, serve the aerospace, automotive, commercial transportation, and
industrial products markets.

On March 9, 2011, Alcoa completed an acquisition of the aerospace fastener business of TransDigm Group Inc.
for $240. This business is a leading global designer, producer, and supplier of highly engineered aircraft components, with three locations (one in the state of California and two in the United Kingdom) that employ a combined 400 people.
Specifically, this business provides a wide variety of high-strength, high temperature nickel alloy specialty engine fasteners, airframe bolts, and slotted entry bearings. In 2010, this business generated sales of $61. The assets and liabilities of
this business were included in the Engineered Products and Solutions segment as of March 31, 2011; this business results of operations were included in this segment beginning March 9, 2011.

In July 2010, Alcoa completed an acquisition of the commercial building and construction business of a privately-held company, Traco, for $77. This
business, located in Cranberry, Pennsylvania, employing 650 people, is a premier manufacturer of windows and doors for the commercial building and construction market and generated sales of approximately $100 in 2009. The assets and liabilities of
this business were included in the Engineered Products and Solutions segment as of the end of July 2010 and this business results of operations were included in this segment since the beginning of August 2010.

Third-party sales for the Engineered Products and Solutions segment climbed 17% in 2011 compared with 2010, largely attributable to higher volumes across
all businesses, especially related to the aerospace and commercial transportation markets. Additionally, sales from the acquired fastener business ($58) and from the acquired building and construction business (increase of $40) and favorable foreign
currency movements due to a stronger euro were positive impacts. Slightly offsetting the positive contributions was the absence of sales related to the April 2010 divestiture of the Transportation Products Europe business ($28). Third-party sales
for this segment decreased 2% in 2010 compared with 2009, primarily due to unfavorable pricing and mix across all businesses; lower volumes for the fasteners, power and propulsion, and building and construction businesses; the absence of sales
related to the

divestiture of the Transportation Products Europe business in April 2010 (decrease of $50); and unfavorable foreign currency movements due to a weaker euro. These negative impacts were mostly
offset by higher volumes in the wheels and forgings businesses and sales from the newly acquired business mentioned above ($37).

ATOI for the
Engineered Products and Solutions segment rose 30% in 2011 compared with 2010, principally the result of the previously mentioned volume impacts and net productivity improvements across most businesses, somewhat offset by unfavorable price/product
mix. ATOI for this segment climbed 32% in 2010 compared with 2009, mainly due to productivity improvements and cost reduction initiatives across all businesses, partially offset by unfavorable pricing and mix.

In 2012, the aerospace market is expected to remain strong and incremental gains are anticipated for the commercial transportation market (excluding
Europe), while the building and construction market is expected to decline. Also, continued net productivity improvements are anticipated.

Reconciliation of ATOI to Consolidated Net Income (Loss) Attributable to Alcoa

Items required to reconcile total segment ATOI to consolidated net income (loss) attributable to Alcoa include: the impact of LIFO inventory accounting; interest expense; noncontrolling interests;
corporate expense (general administrative and selling expenses of operating the corporate headquarters and other global administrative facilities, along with depreciation and amortization on corporate-owned assets); restructuring and other charges;
discontinued operations; and other items, including intersegment profit eliminations and other metal adjustments, differences between tax rates applicable to the segments and the consolidated effective tax rate, the results of the soft alloy
extrusions business in Brazil, and other nonoperating items such as foreign currency transaction gains/losses and interest income.

The
following table reconciles total segment ATOI to consolidated net income (loss) attributable to Alcoa:

2011

2010

2009

Total segment ATOI

$

1,893

$

1,424

$

(234

)

Unallocated amounts (net of tax):

Impact of LIFO

(38

)

(16

)

235

Interest expense

(340

)

(321

)

(306

)

Noncontrolling interests

(194

)

(138

)

(61

)

Corporate expense

(290

)

(291

)

(304

)

Restructuring and other charges

(196

)

(134

)

(155

)

Discontinued operations

(3

)

(8

)

(166

)

Other

(221

)

(262

)

(160

)

Consolidated net income (loss) attributable to Alcoa

$

611

$

254

$

(1,151

)

The significant changes in the reconciling items between total segment ATOI and consolidated net income attributable to
Alcoa for 2011 compared with 2010 consisted of:



a change in the Impact of LIFO, due to higher prices for alumina and metal, both of which were driven by an increase in LME prices and higher input costs, particularly coke, energy, and caustic soda;



an increase in Interest expense, principally caused by a $27 net charge related to the early retirement of various outstanding notes ($48 in purchase premiums paid partially offset by a $21 gain for
in-the-money interest rate swaps), somewhat offset by the absence of a $9 net charge related to the early retirement of various outstanding notes ($27 in purchase premiums paid partially offset by an $18 gain for in-the-money
interest rate swaps);



an increase in Noncontrolling interests, mainly due to higher earnings at AWAC, principally driven by higher realized prices, partially offset by higher input costs and net unfavorable foreign currency
movements due to a weaker U.S. dollar;

an increase in Restructuring and other charges, mostly due to higher layoff costs, largely attributable to Alcoas plans to curtail three smelters in Europe; and



a change in Other, primarily due to a net favorable change of $57 in mark-to-market derivative contracts and the difference between the consolidated effective tax rate and the estimated tax rates
applicable to the segments, partially offset by a decrease in the cash surrender value of company-owned life insurance.

The
significant changes in the reconciling items between total segment ATOI and consolidated net income (loss) attributable to Alcoa for 2010 compared with 2009 consisted of:



a change in the Impact of LIFO due to higher prices for alumina and metal, both of which were driven by a significant rise in LME prices, and a significantly smaller reduction in LIFO inventory
quantities;



an increase in Interest expense, primarily due to a decline in interest capitalized (mainly the result of placing the Juruti and São Luís growth projects in service during the second half of
2009) and a $9 net charge related to the early retirement of various outstanding notes ($27 in purchase premiums paid partially offset by an $18 gain for in-the-money interest rate swaps), mostly offset by a 7% lower average debt level
(primarily due to the absence of commercial paper resulting from Alcoas improved liquidity position) and lower amortization expense of financing costs (principally related to the fees paid (fully amortized in October 2009) for the former
$1,900 364-day senior unsecured revolving credit facility);



an increase in Noncontrolling interests, mainly due to higher earnings at AWAC, primarily driven by a rise in realized prices, partially offset by net unfavorable foreign currency movements due to a
weaker U.S. dollar, higher depreciation and operating costs related to the Juruti and São Luís growth projects placed into service in the second half of 2009, and the absence of a gain recognized on the acquisition of a BHP Billiton
subsidiary in the Republic of Suriname;



a decline in Corporate expense, primarily due to reductions in expenses for contractors and consultants, lower deferred compensation (as a result of a decline in plan performance), a decrease in bad debt
expense, and a decrease in information technology expenditures, somewhat offset by an increase in labor costs (principally due to higher annual incentive and performance compensation and employee benefits costs (employer matching savings plan
contributions for U.S. salaried participants were suspended during 2009));



a decrease in Restructuring and other charges, mainly due to lower layoff charges, somewhat offset by higher asset impairments and other exit costs, primarily related to the permanent shutdown and planned
demolition of certain idled structures at five U.S. locations;



a change in Discontinued operations, mostly the result of the absence of both a $129 loss (an additional $6 loss was recognized in 2010) on the divestiture of the wire harness and electrical portion of
the EES business (June 2009) and a $9 loss on the divestiture of the electronics portion of the EES business (December 2009); and



a change in Other, mainly due to a net income tax charge (includes discrete tax items) related to the difference in the consolidated effective tax rate and the estimated tax rates applicable to the
segments, net foreign currency losses, the absence of a $21 favorable adjustment for the finalization of the estimated fair value of the former Sapa AB joint venture, and a smaller improvement in the cash surrender value of company-owned life
insurance; partially offset by the absence of a $118 realized loss on the sale of an equity investment and favorable changes in mark-to-market derivative contracts.

See the Environmental Matters section of Note N to the Consolidated Financial Statements in Part II Item 8 of this Form 10-K.

Liquidity and Capital Resources

Alcoa maintains a disciplined approach to cash management
and strengthening of its balance sheet. In 2011, as in the prior two years, management continued this approach while providing the Company with the necessary liquidity to operate effectively as the global economy continues to recover from the
economic downturn that began in 2008.

In response to changes in the economic markets across the globe in the second half of 2008, management
initiated the following actions to conserve cash and preserve liquidity: greater scrutiny over the daily management of Alcoas cash position; higher risk tolerance on raw materials with lower minimum order quantities and lower carrying levels;
targeted headcount reductions across the globe; a global salary and hiring freeze (lifted at the beginning of 2010); suspension of the existing share repurchase program (expired in December 2010); and the addition of a new 364-day $1,900 revolving
credit facility (expired in October 2009). A number of changes were also made to Alcoas capital expenditures strategy as follows: capital expenditure approval levels were lowered dramatically; growth projects were halted where it was deemed
economically feasible; and all non-critical capital expenditures were stopped. Capital expenditures are deemed critical if they maintain Alcoas compliance with the law, keep a facility operating, or satisfy customer requirements if the
benefits outweigh the costs. The planned sale or shutdown of various businesses contributed positively to Alcoas liquidity position in 2009.

In March 2009, management initiated an additional series of operational and financial actions to significantly improve Alcoas cost structure and liquidity. Operational actions included procurement
efficiencies and overhead rationalization to reduce costs and working capital initiatives to yield significant cash improvements. Financial actions included a reduction in the quarterly common stock dividend from $0.17 per share to $0.03 per share,
which began with the dividend paid on May 25, 2009, and the issuance of 172.5 million shares of common stock and $575 in convertible notes that collectively yielded $1,438 in net proceeds.

In January 2010, management initiated further operational actions to not only maintain the procurement and overhead savings and working capital
improvements achieved in 2009, but to improve on them throughout 2010. Also, a further reduction in capital expenditures was planned in order to achieve the level necessary to sustain operations without sacrificing the quality of Alcoas
alumina and aluminum products.

In 2011, management continued its previous actions to maintain the achieved procurement and overhead savings
from the past two years and to further improve cash with working capital initiatives. Additionally, maintaining a level of capital expenditures consistent with that of 2010 was planned. During 2012, management plans to continue the actions from the
past three years to achieve additional procurement and overhead savings, to further improve on working capital, and to maintain a consistent level of capital expenditures.

Along with the foregoing actions, cash provided from operations and financing activities is expected to be adequate to cover Alcoas current operational and business needs. For an analysis of
long-term liquidity, see Contractual Obligations and Off-Balance Sheet Arrangements.

Cash from Operations

Cash from operations in 2011 was $2,193 compared with $2,261 in 2010. The decline of $68, or 3%, was largely attributable to higher pension contributions
of $223, a lower net cash inflow associated with working capital of $206, an additional cash outflow of $71 in noncurrent assets, and a lower cash inflow of $36 in noncurrent liabilities, mostly offset by better operating results.

The higher pension contributions were principally driven by cash contributions made to U.S. pension plans
towards maintaining an approximately 80% funded status.

The major components of the lower net cash inflow in working capital were as follows:
an additional outflow of $122 in inventories, mostly due to higher production as a result of increased demand and rising input costs; a higher inflow of $47 in prepaid expenses and other current assets, primarily driven by the absence of collateral
posted related to a mark-to-market energy contract that ended in September 2011; an additional inflow of $66 in accounts payable, trade, principally the result of higher purchasing needs and timing of vendor payments; a lower outflow of $201 in
accrued expenses, mostly related to fewer cash payments for restructuring programs and the absence of a reduction in collateral held related to mark-to-market energy contracts; and a smaller inflow of $385 in taxes, including income taxes, mainly
due to the absence of a $347 federal income tax refund for the carryback of Alcoas 2009 net loss to prior tax years.

The additional
outflow in noncurrent assets was largely attributable to higher deferred mining costs related to bauxite operations in Australia, while the lower inflow in noncurrent liabilities was mainly caused by a smaller increase in the environmental
remediation reserve.

Cash from operations in 2010 was $2,261 compared with $1,365 in 2009. The improvement of $896, or 66%, was primarily due
to significantly better operating results, partially offset by a lower net cash inflow associated with working capital of $904.

The major
components of the lower net cash inflow in working capital were as follows: an additional outflow of $787 in receivables, primarily as a result of higher sales in three of the four reportable segments and a significant rise in LME prices; a higher
outflow of $1,485 in inventories, mostly due to a build-up of levels to meet anticipated demand and higher input costs; an additional inflow of $962 in accounts payable, trade, principally the result of higher purchasing needs and timing of vendor
payments; and a higher inflow of $646 in taxes, including income taxes, mainly due to a $310 receivable recorded in 2009 and the receipt of $347 in 2010, both related to a federal income tax refund for the carryback of Alcoas 2009 net loss to
prior tax years.

Financing Activities

Cash provided from financing activities was $62 in 2011 compared with cash used for financing activities of $952 in 2010 and cash provided from financing activities of $37 in 2009.

The source of cash in 2011 was mostly driven by $1,256 in additions to long-term debt, of which $1,248 was for the issuance of 5.40% Notes due 2021; and
a change of $224 in commercial paper; mostly offset by $1,194 in payments on long-term debt, principally related to $881 for the early retirement of all of the 5.375% Notes due 2013 and a portion of the 6.00% Notes due 2013, $218 for previous
borrowings on the loans supporting the São Luís refinery expansion, Juruti bauxite mine development, and Estreito hydroelectric power project in Brazil, and $45 for a loan associated with the Samara, Russia facility; net cash
distributed to noncontrolling interests of $88, all of which relates to Alumina Limiteds share of AWAC; and $131 in dividends paid to shareholders.

The use of cash in 2010 was primarily due to $1,757 in payments on long-term debt, mostly related to $511 for the repayment of 7.375% Notes due 2010 as scheduled, $825 for the early retirement of all of
the 6.50% Notes due 2011 and a portion of the 6.00% Notes due 2012 and 5.375% Notes due 2013, and $287 related to previous borrowings on the loans supporting the São Luís refinery expansion and Juruti bauxite mine development in
Brazil; $125 in dividends paid to shareholders; net cash paid to noncontrolling interests of $94, all of which relates to Alumina Limiteds share of AWAC; $66 in acquisitions of noncontrolling interests, mainly the result of the $60 paid to
redeem the convertible securities of a subsidiary that were held by Alcoas former partner related to the joint venture in Saudi Arabia; and a change of $44 in short-term borrowings; partially offset by $1,126 in additions to long-term debt, of
which $998 was for the issuance of 6.150% Notes due 2020 and $76 was related to borrowings under the loans that support the Estreito hydroelectric power project in Brazil.

The source of cash in 2009 was principally the result of $1,049 in additions to long-term debt, mainly
driven by net proceeds of $562 from the issuance of $575 in convertible notes and $394 in borrowings under loans that support the São Luís refinery expansion, Juruti bauxite mine development, and Estreito hydroelectric power project in
Brazil; net proceeds of $876 from the issuance of 172.5 million shares of common stock; and net cash received from noncontrolling interests of $340, principally related to Alumina Limiteds share of AWAC; all of which was mostly offset by
a $1,535 decrease in outstanding commercial paper, partly due to tightening in the credit markets and a reduction in market availability as a result of the change in Alcoas credit ratings in early 2009; $228 in dividends paid to shareholders;
a $292 net change in short-term borrowings ($1,300 was borrowed and repaid under Alcoas $1,900 364-day senior unsecured revolving credit facility in early 2009 and $255 in new loans to support Alcoa Alumínios export operations was
borrowed and repaid during 2009), mostly the result of repayments of working capital loans in Spain and Asia and a $155 decrease in accounts payable settlement arrangements; and payments on long-term debt of $156, including $97 related to the loans
in Brazil for growth projects.

On July 25, 2011, Alcoa entered into a Five-Year Revolving Credit Agreement (the Credit
Agreement) with a syndicate of lenders and issuers named therein. The Credit Agreement provides a $3,750 senior unsecured revolving credit facility (the Credit Facility), the proceeds of which are to be used to provide working
capital or for other general corporate purposes of Alcoa, including support of Alcoas commercial paper program. Subject to the terms and conditions of the Credit Agreement, Alcoa may from time to time request increases in lender commitments
under the Credit Facility, not to exceed $500 in aggregate principal amount, and may also request the issuance of letters of credit, subject to a letter of credit sublimit of $1,000 under the Credit Facility.

The Credit Facility matures on July 25, 2016, unless extended or earlier terminated in accordance with the provisions of the Credit Agreement. Alcoa
may make two one-year extension requests during the term of the Credit Facility, with any extension being subject to the lender consent requirements set forth in the Credit Agreement. Under the provisions of the Credit Agreement, Alcoa will pay a
fee of 0.25% (based on Alcoas long-term debt ratings as of December 31, 2011) of the total commitment per annum to maintain the Credit Facility.

The Credit Facility is unsecured and amounts payable under it will rank pari passu with all other unsecured, unsubordinated indebtedness of Alcoa. Borrowings under the Credit Facility may be
denominated in U.S. dollars or euros. Loans will bear interest at a base rate or a rate equal to LIBOR, plus, in each case, an applicable margin based on the credit ratings of Alcoas outstanding senior unsecured long-term debt. The applicable
margin on base rate loans and LIBOR loans will be 0.50% and 1.50% per annum, respectively, based on Alcoas long-term debt ratings as of December 31, 2011. Loans may be prepaid without premium or penalty, subject to customary breakage
costs.

The Credit Facility replaces Alcoas Five-Year Revolving Credit Agreement, dated as of October 2, 2007 (the Former
Credit Agreement), which was scheduled to mature on October 2, 2012. The Former Credit Agreement, which had a total capacity (excluding the commitment of Lehman Commercial Paper Inc.) of $3,275 and was undrawn, was terminated effective
July 25, 2011.

The Credit Agreement includes covenants substantially similar to those in the Former Credit Agreement, including, among
others, (a) a leverage ratio, (b) limitations on Alcoas ability to incur liens securing indebtedness for borrowed money, (c) limitations on Alcoas ability to consummate a merger, consolidation or sale of all or
substantially all of its assets, and (d) limitations on Alcoas ability to change the nature of its business. As of December 31, 2011, Alcoa was in compliance with all such covenants.

The obligation of Alcoa to pay amounts outstanding under the Credit Facility may be accelerated upon the occurrence of an Event of Default as
defined in the Credit Agreement. Such Events of Default include, among others, (a) Alcoas failure to pay the principal of, or interest on, borrowings under the Credit Facility, (b) any representation or warranty of Alcoa in the
Credit Agreement proving to be materially false or misleading, (c) Alcoas breach of any of its covenants contained in the Credit Agreement, and (d) the bankruptcy or insolvency of Alcoa.

There were no amounts outstanding at December 31, 2011 and no amounts were borrowed during 2011 under
the Credit Facility. There were no amounts outstanding at December 31, 2010 and no amounts were borrowed during 2011 and 2010 under the Former Credit Agreement.

In February 2011, Alcoa filed an automatic shelf registration statement with the Securities and Exchange Commission for an indeterminate amount of securities for future issuance. This shelf registration
statement replaced Alcoas existing shelf registration statement (filed in March 2008). As of December 31, 2011 and 2010, $1,250 and $3,075 in senior debt securities were issued under the respective shelf registration statements.

Alcoas cost of borrowing and ability to access the capital markets are affected not only by market conditions but also by the short-
and long-term debt ratings assigned to Alcoas debt by the major credit rating agencies.

On April 12, 2011, Standard and
Poors Ratings Services (S&P) affirmed the following ratings for Alcoa: long-term debt at BBB- and short-term debt at A-3. Additionally, S&P changed the current outlook from negative to stable.

On March 2, 2011, Moodys Investors Service (Moodys) confirmed the following ratings for Alcoa: long-term debt at Baa3 and short-term
debt at Prime-3. Additionally, Moodys changed the current outlook from negative to stable. On September 7, 2011, Moodys affirmed the ratings and outlook published in its March 2, 2011 report.

On February 22, 2011, Fitch Ratings (Fitch) affirmed the following ratings for Alcoa: long-term debt at BBB- and short-term debt at F3.
Additionally, Fitch changed the current outlook from negative to stable.

Investing Activities

Cash used for investing activities was $1,852 in 2011 compared with $1,272 in 2010 and $721 in 2009.

The use of cash in 2011 was principally due to $1,287 in capital expenditures (includes costs related to environmental control in new and expanded
facilities of $148), 28% of which related to growth projects, including the Estreito hydroelectric power project and Juruti bauxite mine development; $374 in additions to investments, mostly for the equity contributions of $249 related to the
aluminum complex joint venture in Saudi Arabia and purchase of $41 in available-for-sale securities held by Alcoas captive insurance company; and $239 (net of cash acquired for the acquisition of an aerospace fastener business); slightly
offset by $54 in sales of investments, primarily related to available-for-sale securities held by Alcoas captive insurance company; and $38 in proceeds from the sale of assets, mainly attributable to the sale of land in Australia.

The use of cash in 2010 was primarily due to $1,015 in capital expenditures (includes costs related to environmental control in new and expanded
facilities of $87), 44% of which related to growth projects, including the Estreito hydroelectric power project, Juruti bauxite mine development, and São Luís refinery expansion; $352 in additions to investments, mostly for the equity
contributions of $160 related to the joint venture in Saudi Arabia and purchase of $126 in available-for-sale securities held by Alcoas captive insurance company; and $72 for acquisitions, principally related to the purchase of a new building
and construction systems business; slightly offset by $141 in sales of investments, virtually all of which related to the sale of available-for-sale securities held by Alcoas captive insurance company.

The use of cash in 2009 was mainly due to $1,622 in capital expenditures (includes costs related to environmental control in new and expanded facilities
of $59), 68% of which related to growth projects, including the São Luís refinery expansion, Juruti bauxite mine development, and Estreito hydroelectric power project; $181 in additions to investments, mostly for $83 in
available-for-sale securities held by Alcoas captive insurance company and an $80 interest in a new joint venture in Saudi Arabia; and a net cash outflow of $65 for the divestiture of assets and businesses, including a cash outflow of $204 for
the EES business, cash inflows of $111 for the collection of a note related to the 2007 sale of the Three Oaks mine and the sale of property in Vancouver, WA, and a cash inflow of $20 for the sale of the Shanghai (China) foil plant; all of which was
partially offset by $1,031 from sales of investments, mostly related to the receipt of $1,021 for the sale of an equity investment; and a net cash inflow of $112 from

acquisitions, mainly due to $97 from the acquisition of a BHP Billiton subsidiary in the Republic of Suriname and $18 from the Elkem/Sapa AB exchange transaction.

Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations. Alcoa is required to make future payments under various contracts, including long-term purchase obligations, debt agreements, and lease agreements. Alcoa also has
commitments to fund its pension plans, provide payments for other postretirement benefit plans, and finance capital projects. As of December 31, 2011, a summary of Alcoas outstanding contractual obligations is as follows (these
contractual obligations are grouped in the same manner as they are classified in the Statement of Consolidated Cash Flows in order to provide a better understanding of the nature of the obligations and to provide a basis for comparison to historical
information):

Total

2012

2013-2014

2015-2016

Thereafter

Operating activities:

Energy-related purchase obligations

$

22,094

$

1,802

$

3,008

$

2,949

$

14,335

Raw material purchase obligations

4,978

1,963

1,403

963

649

Other purchase obligations

3,249

244

491

358

2,156

Operating leases

1,290

246

285

195

564

Interest related to total debt

4,848

508

956

855

2,529

Estimated minimum required pension funding

2,500

650

1,250

600

-

Other postretirement benefit payments

2,660

285

565

545

1,265

Layoff and other restructuring payments

134

85

30

19

-

Deferred revenue arrangements

238

109

29

16

84

Uncertain tax positions

63

-

-

-

63

Financing activities:

Total debt

9,366

731

1,292

71

7,272

Dividends to shareholders

-

-

-

-

-

Investing activities:

Capital projects

1,351

711

583

57

-

Equity contributions

691

350

341

-

-

Payments related to acquisitions

-

-

-

-

-

Totals

$

53,462

$

7,684

$

10,233

$

6,628

$

28,917

Obligations for Operating Activities

Energy-related purchase obligations consist primarily of electricity and natural gas contracts with expiration dates ranging from less than 1 year to 40 years. The majority of raw material and other
purchase obligations have expiration dates of 24 months or less. Certain purchase obligations contain variable pricing components, and, as a result, actual cash payments may differ from the estimates provided in the preceding table. Operating leases
represent multi-year obligations for certain computer equipment, plant equipment, vehicles, and buildings and alumina refinery process control technology.

Interest related to total debt is based on interest rates in effect as of December 31, 2011 and is calculated on debt with maturities that extend to 2037. The effect of outstanding interest rate
swaps, which are accounted for as fair value hedges, are included in interest related to total debt. As of December 31, 2011, these hedges effectively convert the interest rate from fixed to floating on $515 of debt through 2018. As the
contractual interest rates for certain debt and interest rate swaps are variable, actual cash payments may differ from the estimates provided in the preceding table.

Estimated minimum required pension funding and postretirement benefit payments are based on actuarial estimates using current assumptions for discount rates, long-term rate of return on plan assets, rate
of compensation increases, and health care cost trend rates. The minimum required contributions for pension funding are estimated to be $650 for 2012, $650 for 2013, $600 for 2014, $400 for 2015, and $200 for 2016. These expected pension
contributions reflect

the impacts of the Pension Protection Act of 2006 and the Worker, Retiree, and Employer Recovery Act of 2008. Pension contributions are expected to continue to decline if all actuarial
assumptions are realized and remain the same in the future. Other postretirement benefit payments are expected to approximate $270 to $285 annually for years 2012 through 2016 and $250 annually for years 2017 through 2021. Such payments will be
slightly offset by subsidy receipts related to Medicare Part D, which are estimated to be approximately $25 to $35 annually for years 2012 through 2021. Alcoa has determined that it is not practicable to present pension funding and other
postretirement benefit payments beyond 2016 and 2021, respectively.

Layoff and other restructuring payments primarily relate to severance
costs and are expected to be paid within one year. Amounts scheduled to be paid beyond one year are related to lease termination costs, ongoing site remediation work, and special termination benefit payments.

Deferred revenue arrangements require Alcoa to deliver alumina and sheet and plate to certain customers over the specified contract period (through 2027
for one alumina contract and through 2012 and 2020 for two sheet and plate contracts). While these obligations are not expected to result in cash payments, they represent contractual obligations for which the Company would be obligated if the
specified product deliveries could not be made.

Uncertain tax positions taken or expected to be taken on an income tax return may result in
additional payments to tax authorities. The amount in the preceding table includes interest and penalties accrued related to such positions as of December 31, 2011. The total amount of uncertain tax positions is included in the
Thereafter column as the Company is not able to reasonably estimate the timing of potential future payments. If a tax authority agrees with the tax position taken or expected to be taken or the applicable statute of limitations expires,
then additional payments will not be necessary.

Obligations for Financing Activities

Total debt amounts in the preceding table represent the principal amounts of all outstanding debt, including short-term borrowings, commercial paper, and
long-term debt. Maturities for long-term debt extend to 2037.

Alcoa has historically paid quarterly dividends on its preferred and common
stock. Including dividends on preferred stock, Alcoa paid $131 in dividends to shareholders during 2011. Because all dividends are subject to approval by Alcoas Board of Directors, amounts are not included in the preceding table unless such
authorization has occurred. As of December 31, 2011, there were 1,064,412,066 and 546,024 shares of outstanding common stock and preferred stock, respectively. The annual preferred stock dividend is at the rate of $3.75 per share and the annual
common stock dividend is $0.12 per share.

Obligations for Investing Activities

Capital projects in the preceding table only include amounts approved by management as of December 31, 2011. Funding levels may vary in future years
based on anticipated construction schedules of the projects. It is expected that significant expansion projects will be funded through various sources, including cash provided from operations. Total capital expenditures are anticipated to be
approximately $1,350 in 2012.

Equity contributions represent Alcoas committed investment related to a joint venture in Saudi Arabia. In
December 2009, Alcoa signed an agreement to enter into a joint venture to develop a new aluminum complex in Saudi Arabia, comprised of a bauxite mine, alumina refinery, aluminum smelter, and rolling mill, which will require the Company to contribute
approximately $1,100 over a four-year period (2010 through 2013). As of December 31, 2011, Alcoa has made equity contributions of $409. The timing of the amounts included in the preceding table may vary based on changes in anticipated
construction schedules of the project.

Payments related to acquisitions are based on provisions in certain acquisition agreements that state
additional funds are due to the seller from Alcoa if the businesses acquired achieve stated financial and operational thresholds. Amounts

are only presented in the preceding table if it is has been determined that payment is more likely than not to occur. In connection with the 2005 acquisition of two fabricating facilities in
Russia, Alcoa could be required to make contingent payments of approximately $50 through 2015, but are not included in the preceding table as they have not met such standard.

Off-Balance Sheet Arrangements. At December 31, 2011, Alcoa has maximum potential future payments for guarantees issued on behalf of certain third parties of $779. These guarantees expire in
2015 through 2027 and relate to project financing for hydroelectric power projects in Brazil and the aluminum complex in Saudi Arabia. Alcoa also has outstanding bank guarantees related to legal, customs duties, and leasing obligations, among
others. The total amount committed under these guarantees, which expire at various dates, was $436 at December 31, 2011.

Alcoa has
outstanding letters of credit primarily related to workers compensation, derivative contracts, and leasing obligations. The total amount committed under these letters of credit, which expire at various dates, mostly in 2012, was $334 at
December 31, 2011. Alcoa also has outstanding surety bonds primarily related to customs duties, self-insurance, and legal obligations. The total amount committed under these bonds, which automatically renew or expire at various dates, mostly in
2012, was $183 at December 31, 2011.

Alcoa had a program to sell a senior undivided interest in certain customer receivables, without
recourse, on a continuous basis to a third-party for cash (up to $250). This program was renewed on October 29, 2009 and was due to expire on October 28, 2010. On March 26, 2010, Alcoa terminated this program and repaid the $250
originally received in 2009. In light of the adoption of accounting changes related to the transfer of financial assets, had the securitization program not been terminated, it would have resulted in a $250 increase in both Receivables from customers
and Short-term borrowings on Alcoas Consolidated Balance Sheet.

Also on March 26, 2010, Alcoa entered into two one-year
arrangements (both were renewed in March 2011) with third parties to sell certain customer receivables outright without recourse on a continuous basis. Additionally, in November 2011, Alcoa entered into a five-year arrangement with another third
party to sell additional customer receivables outright without recourse on a continuous basis. As of December 31, 2011, $212 of the sold receivables under the three arrangements combined were uncollected. Alcoa is servicing the customer
receivables for the third parties at market rates; therefore, no servicing asset or liability was recorded.

Critical Accounting
Policies and Estimates

The preparation of the Consolidated Financial Statements in accordance with accounting principles generally
accepted in the United States of America requires management to make certain judgments, estimates, and assumptions regarding uncertainties that affect the amounts reported in the Consolidated Financial Statements and disclosed in the accompanying
Notes. Areas that require significant judgments, estimates, and assumptions include accounting for derivatives and hedging activities; environmental and litigation matters; asset retirement obligations; the testing of goodwill, equity investments,
and properties, plants, and equipment for impairment; estimating fair value of businesses to be divested; pension plans and other postretirement benefits obligations; stock-based compensation; and income taxes.

Management uses historical experience and all available information to make these judgments, estimates, and assumptions, and actual results may differ
from those used to prepare the Companys Consolidated Financial Statements at any given time. Despite these inherent limitations, management believes that Managements Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements and accompanying Notes provide a meaningful and fair perspective of the Company.

A
summary of the Companys significant accounting policies is included in Note A to the Consolidated Financial Statements in Part II Item 8 of this Form 10-K. Management believes that the application of these policies on a consistent basis
enables the Company to provide the users of the Consolidated Financial Statements with useful and reliable information about the Companys operating results and financial condition.

Derivatives and Hedging. Derivatives are held for purposes other than trading and are part of a
formally documented risk management program. For derivatives designated as fair value hedges, Alcoa measures hedge effectiveness by formally assessing, at least quarterly, the historical high correlation of changes in the fair value of the hedged
item and the derivative hedging instrument. For derivatives designated as cash flow hedges, Alcoa measures hedge effectiveness by formally assessing, at least quarterly, the probable high correlation of the expected future cash flows of the hedged
item and the derivative hedging instrument. The ineffective portions of both types of hedges are recorded in sales or other income or expense in the current period. If the hedging relationship ceases to be highly effective or it becomes probable
that an expected transaction will no longer occur, future gains or losses on the derivative instrument are recorded in other income or expense.

Alcoa accounts for interest rate swaps related to its existing long-term debt and hedges of firm customer commitments for aluminum as fair value hedges.
As a result, the fair values of the derivatives and changes in the fair values of the underlying hedged items are reported in other current and noncurrent assets and liabilities in the Consolidated Balance Sheet. Changes in the fair values of these
derivatives and underlying hedged items generally offset and are recorded each period in sales or interest expense, consistent with the underlying hedged item.

Alcoa accounts for hedges of foreign currency exposures and certain forecasted transactions as cash flow hedges. The fair values of the derivatives are recorded in other current and noncurrent assets and
liabilities in the Consolidated Balance Sheet. The effective portions of the changes in the fair values of these derivatives are recorded in other comprehensive income and are reclassified to sales, cost of goods sold, or other income or expense in
the period in which earnings are impacted by the hedged items or in the period that the transaction no longer qualifies as a cash flow hedge. These contracts cover the same periods as known or expected exposures, generally not exceeding five years.

If no hedging relationship is designated, the derivative is marked to market through earnings.

Cash flows from derivatives are recognized in the Statement of Consolidated Cash Flows in a manner consistent with the underlying transactions.

Environmental Matters. Expenditures for current operations are expensed or capitalized, as appropriate. Expenditures relating to
existing conditions caused by past operations, which will not contribute to future revenues, are expensed. Liabilities are recorded when remediation costs are probable and can be reasonably estimated. The liability may include costs such as site
investigations, consultant fees, feasibility studies, outside contractors, and monitoring expenses. Estimates are generally not discounted or reduced by potential claims for recovery. Claims for recovery are recognized as agreements are reached with
third parties. The estimates also include costs related to other potentially responsible parties to the extent that Alcoa has reason to believe such parties will not fully pay their proportionate share. The liability is continuously reviewed and
adjusted to reflect current remediation progress, prospective estimates of required activity, and other factors that may be relevant, including changes in technology or regulations.

Litigation Matters. For asserted claims and assessments, liabilities are recorded when an unfavorable outcome of a matter is deemed to be probable and the loss is reasonably estimable. Management
determines the likelihood of an unfavorable outcome based on many factors such as the nature of the matter, available defenses and case strategy, progress of the matter, views and opinions of legal counsel and other advisors, applicability and
success of appeals processes, and the outcome of similar historical matters, among others. Once an unfavorable outcome is deemed probable, management weighs the probability of estimated losses, and the most reasonable loss estimate is recorded. If
an unfavorable outcome of a matter is deemed to be reasonably possible, then the matter is disclosed and no liability is recorded. With respect to unasserted claims or assessments, management must first determine that the probability that an
assertion will be made is likely, then, a determination as to the likelihood of an unfavorable outcome and the ability to reasonably estimate the potential loss is made. Legal matters are reviewed on a continuous basis to determine if there has been
a change in managements judgment regarding the likelihood of an unfavorable outcome or the estimate of a potential loss.

reclamation, and landfill closure. Alcoa also recognizes AROs for any significant lease restoration obligation, if required by a lease agreement, and for the disposal of regulated waste materials
related to the demolition of certain power facilities. The fair values of these AROs are recorded on a discounted basis, at the time the obligation is incurred, and accreted over time for the change in present value. Additionally, Alcoa capitalizes
asset retirement costs by increasing the carrying amount of the related long-lived assets and depreciating these assets over their remaining useful life.

Certain conditional asset retirement obligations (CAROs) related to alumina refineries, aluminum smelters, and fabrication facilities have not been recorded in the Consolidated Financial Statements due to
uncertainties surrounding the ultimate settlement date. A CARO is a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within
Alcoas control. Such uncertainties exist as a result of the perpetual nature of the structures, maintenance and upgrade programs, and other factors. At the date a reasonable estimate of the ultimate settlement date can be made, Alcoa would
record an ARO for the removal, treatment, transportation, storage and (or) disposal of various regulated assets and hazardous materials such as asbestos, underground and aboveground storage tanks, polychlorinated biphenyls, various process
residuals, solid wastes, electronic equipment waste, and various other materials. Such amounts may be material to the Consolidated Financial Statements in the period in which they are recorded. If Alcoa was required to demolish all such structures
immediately, the estimated CARO as of December 31, 2011 ranges from less than $1 to $52 per structure (131 structures) in todays dollars.

Goodwill. Goodwill is not amortized; instead, it is reviewed for impairment annually (in the fourth quarter) or more frequently if indicators of impairment exist or if a decision is made to sell a
business. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include deterioration in general economic conditions, negative developments in equity and credit markets, adverse
changes in the markets in which an entity operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others. The fair value that could be
realized in an actual transaction may differ from that used to evaluate the impairment of goodwill.

Goodwill is allocated among and evaluated
for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. Alcoa has nine reporting units, of which five are included in the Engineered Products and Solutions segment. The remaining
four reporting units are the Alumina segment, the Primary Metals segment, the Flat-Rolled Products segment, and the soft alloy extrusions business in Brazil, which is included in Corporate. Almost 90% of Alcoas total goodwill is allocated to
three reporting units as follows: Alcoa Fastening Systems (AFS) ($1,153) and Alcoa Power and Propulsion (APP) ($1,627) businesses, both of which are included in the Engineered Products and Solutions segment, and Primary Metals ($1,841). These
amounts include an allocation of Corporates goodwill.

In September 2011, the Financial Accounting Standards Board issued new accounting
guidance for testing goodwill for impairment (see the Recently Adopted Accounting Guidance section of Note A to the Consolidated Financial Statements in Part II Item 8 of this Form 10-K). The guidance provides an entity the option to first
assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50%) that the estimated fair value of a reporting unit is less than its carrying amount. If
an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then required to perform the existing two-step quantitative impairment test (described below), otherwise no further
analysis is required. An entity also may elect not to perform the qualitative assessment and, instead, proceed directly to the two-step quantitative impairment test. The ultimate outcome of the goodwill impairment review for a reporting unit should
be the same whether an entity chooses to perform the qualitative assessment or proceeds directly to the two-step quantitative impairment test.

In the 2011 fourth quarter, in conjunction with managements annual review of goodwill, Alcoa early adopted the new guidance. As a result, Alcoa
instituted a policy for its annual review of goodwill to perform the qualitative assessment for all reporting units not subjected directly to the two-step quantitative impairment test. Management will proceed

directly to the two-step quantitative impairment test for a minimum of three reporting units (based on facts and circumstances) during each annual review of goodwill. This policy will result in
each of the nine reporting units being subjected to the two-step quantitative impairment test at least once during every three-year period.

Under the qualitative assessment, various events and circumstances (or factors) that would affect the estimated fair value of a reporting unit are
identified (similar to impairment indicators above). These factors are then classified by the type of impact they would have on the estimated fair value using positive, neutral, and adverse categories based on current business conditions.
Additionally, an assessment of the level of impact that a particular factor would have on the estimated fair value is determined using high, medium, and low weighting. Furthermore, management considers the results of the most recent two-step
quantitative impairment test completed for a reporting unit (this would be 2010 in which the estimated fair values of all nine reporting units were substantially in excess of their carrying values) and compares the weighted average cost of capital
(WACC) between the current and prior years for each reporting unit.

During the 2011 annual review of goodwill, management performed the
qualitative assessment for six reporting units. Management concluded that it was not more likely than not that the estimated fair values of the six reporting units were less than their carrying values. As such, no further analysis was required.

Under the two-step quantitative impairment test, the evaluation of impairment involves comparing the current fair value of each reporting
unit to its carrying value, including goodwill. Alcoa uses a DCF model to estimate the current fair value of its reporting units when testing for impairment, as management believes forecasted cash flows are the best indicator of such fair value. A
number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including markets and market share, sales volumes and prices, costs to produce, tax rates, capital spending, discount
rate, and working capital changes. Most of these assumptions vary significantly among the reporting units. Cash flow forecasts are generally based on approved business unit operating plans for the early years and historical relationships in later
years. The betas used in calculating the individual reporting units WACC rate are estimated for each business with the assistance of valuation experts.

In the event the estimated fair value of a reporting unit per the DCF model is less than the carrying value, additional analysis would be required. The additional analysis would compare the carrying
amount of the reporting units goodwill with the implied fair value of that goodwill, which may involve the use of valuation experts. The implied fair value of goodwill is the excess of the fair value of the reporting unit over the fair value
amounts assigned to all of the assets and liabilities of that unit as if the reporting unit was acquired in a business combination and the fair value of the reporting unit represented the purchase price. If the carrying value of goodwill exceeds its
implied fair value, an impairment loss equal to such excess would be recognized, which could significantly and adversely impact reported results of operations and shareholders equity.

During the 2011 annual review of goodwill, management proceeded directly to the two-step quantitative impairment test for three reporting units as follows: the Primary Metals segment, building and
construction systems, which is included in the Engineered Products and Solutions segment, and the soft alloy extrusions business in Brazil. The estimated fair values of these three reporting units were substantially in excess of their carrying
values, resulting in no impairment.

As part of the 2011 annual review of goodwill, management considered the market capitalization of
Alcoas common stock in relation to the Companys total shareholders equity. At December 31, 2011, the market capitalization of Alcoas common stock was $9,207. While this amount is less than the Companys total
shareholders equity at December 31, 2011, the estimated aggregate fair value of Alcoas reporting units was substantially in excess of the aforementioned market capitalization amount. In managements judgment, the main reasons
for the difference between Alcoas market capitalization and total shareholders equity at December 31, 2011 are the overall decline in the capital markets and significantly lower commodity prices. As it relates to the capital
markets, there was, and continues to be, significant uncertainty of the sovereign debt of many European countries. This uncertainty has affected the liquidity of many companies that either operate or are located in Europe, although, Alcoa has not
been impacted significantly. The combination of this uncertainty and the continuing decline in commodity prices caused significant and volatile fluctuations in the price of Alcoas common stock. At December 31, 2011 and 2010, the market
price of Alcoas common stock was $8.65 and $15.39, respectively, which equates to a decline of 44%. During 2011, the size and

structure of the Company did not change and there were no specific events or transactions that would cause management to reasonably expect such a decline in the market price of Alcoas
common stock. As a result, management believes the quoted market price of Alcoas common stock does not fully reflect the underlying value of the future aggregate cash flows of the Companys reporting units. Accordingly, management does
not believe that the comparison of Alcoas market capitalization and total shareholders equity as of December 31, 2011 is an indication that goodwill is impaired.

Equity Investments. Alcoa invests in a number of privately-held companies, primarily through joint ventures and consortia, which are accounted for on the equity method. The equity method is applied
in situations where Alcoa has the ability to exercise significant influence, but not control, over the investee. Management reviews equity investments for impairment whenever certain indicators are present suggesting that the carrying value of an
investment is not recoverable. This analysis requires a significant amount of judgment from management to identify events or circumstances indicating that an equity investment is impaired. The following items are examples of impairment indicators:
significant, sustained declines in an investees revenue, earnings, and cash flow trends; adverse market conditions of the investees industry or geographic area; the investees ability to continue operations measured by several
items, including liquidity; and other factors. Once an impairment indicator is identified, management uses considerable judgment to determine if the impairment is other than temporary, in which case the equity investment is written down to its
estimated fair value. An impairment that is other than temporary could significantly and adversely impact reported results of operations.

Properties, Plants, and Equipment. Properties, plants, and equipment are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of such assets (asset group) may not be recoverable. Recoverability of assets is determined by comparing the estimated undiscounted net cash flows of the operations related to the assets (asset group) to their
carrying amount. An impairment loss would be recognized when the carrying amount of the assets (asset group) exceeds the estimated undiscounted net cash flows. The amount of the impairment loss to be recorded is calculated as the excess of the
carrying value of the assets (asset group) over their fair value, with fair value determined using the best information available, which generally is a DCF model. The determination of what constitutes an asset group, the associated estimated
undiscounted net cash flows, and the estimated useful lives of assets also require significant judgments.

Discontinued Operations and
Assets Held For Sale. The fair values of all businesses to be divested are estimated using accepted valuation techniques such as a DCF model, valuations performed by third parties, earnings multiples, or indicative bids, when available. A number
of significant estimates and assumptions are involved in the application of these techniques, including the forecasting of markets and market share, sales volumes and prices, costs and expenses, and multiple other factors. Management considers
historical experience and all available information at the time the estimates are made; however, the fair value that is ultimately realized upon the divestiture of a business may differ from the estimated fair value reflected in the Consolidated
Financial Statements.

Pension and Other Postretirement Benefits. Liabilities and expenses for pension and other postretirement
benefits are determined using actuarial methodologies and incorporate significant assumptions, including the interest rate used to discount the future estimated liability, the expected long-term rate of return on plan assets, and several assumptions
relating to the employee workforce (salary increases, health care cost trend rates, retirement age, and mortality).

The interest rate used to
discount future estimated liabilities is determined using a Company-specific yield curve model (above-median) developed with the assistance of an external actuary. The cash flows of the plans projected benefit obligations are discounted using
a single equivalent rate derived from yields on high quality corporate bonds, which represent a broad diversification of issuers in various sectors, including finance and banking, manufacturing, transportation, insurance, and pharmaceutical, among
others. The yield curve model parallels the plans projected cash flows, which have an average duration of 10 years, and the underlying cash flows of the bonds included in the model exceed the cash flows needed to satisfy the Companys
plans obligations multiple times. In 2011, 2010, and 2009, the discount rate used to determine benefit obligations for U.S. pension and other postretirement benefit plans was 4.90%, 5.75%, and 6.15%, respectively. The impact on the liabilities
of a change in the discount rate of 1/4 of 1% would be approximately $425 and either a charge or credit of $18 to after-tax earnings in the following year.

The expected long-term rate of return on plan assets is generally applied to a five-year market-related
value of plan assets (a four-year average or the fair value at the plan measurement date is used for certain non-U.S. plans). The process used by management to develop this assumption has expanded from one that relied primarily on historical asset
return information to one that also incorporates forward-looking returns by asset class, as described below.

Prior to developing the expected
long-term rate of return for calendar year 2009, management focused on historical actual returns (annual, 10-year moving, and 20-year moving averages) when developing this assumption. Based on that process, management utilized 9% for the expected
long-term rate of return for several years through 2008. For calendar year 2009, the expected long-term rate of return was reduced to 8.75% due to lower future expected market returns as a result of the then global economic downturn. This was
supported by the fact that, in 2008, the 10-year moving average of actual performance fell below 9% for the first time in 20 years, although the 20-year moving average continued to exceed 9%.

For calendar year 2010, management expanded its process by incorporating expected future returns on current and planned asset allocations using information from various external investment managers and
managements own judgment. Management considered this forward-looking analysis as well as the historical return information, and concluded the expected rate of return for calendar 2010 would remain at 8.75%, which was between the 20-year moving
average actual return performance and the estimated future return developed by asset class.

For calendar year 2011, management again
incorporated both actual historical return information and expected future returns into its analysis. Based on strategic asset allocation changes and estimates of future returns by asset class, management used 8.50% as its expected long-term rate of
return for 2011. This rate again falls within the range of the 20-year moving average of actual performance and the expected future return developed by asset class.

For calendar year 2012, management used the same methodology as it did for 2011 and determined that 8.50% will be the expected long-term rate of return.

A change in the assumption for the expected long-term rate of return on plan assets of 1/4 of 1% would impact after-tax earnings by approximately $16 for
2012.

In 2011, a net charge of $991 ($593 after-tax) was recorded in other comprehensive loss, primarily due to an 85 basis point decrease in
the discount rate, which was slightly offset by the favorable performance of the plan assets and the recognition of actuarial losses and prior service costs. In 2010, a net charge of $216 ($138 after-tax) was recorded in other comprehensive income,
primarily due to a 40 basis point decrease in the discount rate, which was somewhat offset by the favorable performance of the plan assets and the recognition of actuarial losses and prior service costs. In 2009, a net charge of $182 ($102
after-tax) was recorded in other comprehensive income, primarily due to a 25 basis point decrease in the discount rate, which was somewhat offset by the favorable performance of the plan assets and the recognition of actuarial losses and prior
service costs. Additionally, in 2010 and 2009, a charge of $2 and $8, respectively, was recorded in accumulated other comprehensive loss due to the reclassification of deferred taxes related to the Medicare Part D prescription drug subsidy.

Stock-based Compensation. Alcoa recognizes compensation expense for employee equity grants using the non-substantive vesting period
approach, in which the expense (net of estimated forfeitures) is recognized ratably over the requisite service period based on the grant date fair value. The fair value of new stock options is estimated on the date of grant using a lattice-pricing
model. Determining the fair value of stock options at the grant date requires judgment, including estimates for the average risk-free interest rate, dividend yield, volatility, annual forfeiture rate, and exercise behavior. These assumptions may
differ significantly between grant dates because of changes in the actual results of these inputs that occur over time.

As part of
Alcoas stock-based compensation plan design, individuals who are retirement-eligible have a six-month requisite service period in the year of grant. Equity grants are issued in January each year. As a result, a larger portion of expense will
be recognized in the first half of each year for these retirement-eligible employees. Compensation

expense recorded in 2011, 2010, and 2009 was $83 ($56 after-tax), $84 ($57 after-tax), and $87 ($58 after-tax), respectively. Of this amount, $18, $19, and $21 in 2011, 2010, and 2009,
respectively, pertains to the acceleration of expense related to retirement-eligible employees.

Most plan participants can choose whether to
receive their award in the form of stock options, stock awards, or a combination of both. This choice is made before the grant is issued and is irrevocable.

Income Taxes. The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, the provision for income taxes represents
income taxes paid or payable (or received or receivable) for the current year plus the change in deferred taxes during the year. Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and
liabilities are recovered or paid, and result from differences between the financial and tax bases of Alcoas assets and liabilities and are adjusted for changes in tax rates and tax laws when enacted.

Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. In evaluating
the need for a valuation allowance, management considers all potential sources of taxable income, including income available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from tax
planning strategies, as well as all available positive and negative evidence. Positive evidence includes factors such as a history of profitable operations, projections of future profitability within the carryforward period, including from tax
planning strategies, and the Companys experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are additional positive evidence. Negative evidence includes items such as
cumulative losses, projections of future losses, or carryforward periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income. Deferred tax assets for which no valuation allowance is
recorded may not be realized upon changes in facts and circumstances, resulting in a future charge to establish a valuation allowance.

Tax
benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively
settled, which means that the statute of limitation has expired or the appropriate taxing authority has completed their examination even though the statute of limitations remains open. Interest and penalties related to uncertain tax positions are
recognized as part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that the related tax benefits are recognized.

Related Party Transactions

Alcoa buys products from and sells products to various related companies, consisting of entities in which Alcoa retains a 50% or less equity interest, at
negotiated arms-length prices between the two parties. These transactions were not material to the financial position or results of operations of Alcoa for all periods presented.

Recently Adopted Accounting Guidance

See the Recently Adopted Accounting Guidance
section of Note A to the Consolidated Financial Statements in Part II Item 8 of this Form 10-K.

Recently Issued Accounting
Guidance

See the Recently Issued Accounting Guidance section of Note A to the Consolidated Financial Statements in Part II
Item 8 of this Form 10-K.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

See the Derivatives section of Note X to the Consolidated Financial Statements in Part II Item 8 of this Form 10-K.

The accompanying Consolidated Financial Statements of Alcoa Inc. and its subsidiaries (the Company)
were prepared by management, which is responsible for their integrity and objectivity. The statements were prepared in accordance with generally accepted accounting principles and include amounts that are based on managements best judgments
and estimates. The other financial information included in the annual report is consistent with that in the financial statements.

Management
also recognizes its responsibility for conducting the Companys affairs according to the highest standards of personal and corporate conduct. This responsibility is characterized and reflected in key policy statements issued from time to time
regarding, among other things, conduct of its business activities within the laws of the host countries in which the Company operates and potentially conflicting outside business interests of its employees. The Company maintains a systematic program
to assess compliance with these policies.

Managements Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. In order to evaluate the
effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in Internal ControlIntegrated
Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Companys system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Companys internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors
of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on the assessment, management has concluded that the Company maintained effective internal control over financial reporting as of December 31,
2011, based on criteria in Internal ControlIntegrated Framework issued by the COSO.

The effectiveness of the Companys
internal control over financial reporting as of December 31, 2011 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

In our opinion, the accompanying consolidated balance sheets and the related statements of consolidated operations, changes in consolidated equity, consolidated comprehensive (loss) income, and
consolidated cash flows present fairly, in all material respects, the financial position of Alcoa Inc. and its subsidiaries (the Company) at December 31, 2011 and 2010, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2011, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The
Companys management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Managements Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Companys internal control over financial reporting based on our integrated
audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors
of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.